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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 30, 2023

 

 

WORTHINGTON ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio   001-08399   31-1189815
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (I.R.S. Employer
Identification No.)

 

200 West Old Wilson Bridge Road

Columbus, OH 43085

  43085
(Address of principal executive offices)   (Zip code)

(614) 438-3210

(Registrant’s telephone number, including area code)

Worthington Industries, Inc.

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Common Shares, without par value   WOR   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

On December 1, 2023 (the “Distribution Date”), at 12:01 a.m. Eastern time, the previously announced separation (the “Separation”) of Worthington Steel, Inc. (“Worthington Steel”) from Worthington Enterprises, Inc. (formerly known as Worthington Industries, Inc.) (“Worthington Enterprises,” the “Company,” “we,” “us” or “our”) was completed. The Separation of Worthington Steel, which is comprised of the Steel Processing business, from Worthington Enterprises, which is comprised of the Building Products, Consumer Products and Sustainable Energy Solutions businesses, was achieved through Worthington Enterprises’ pro rata distribution of 100% of the outstanding common shares of Worthington Steel to holders of record of Worthington Enterprises common shares of as of the close of business on November 21, 2023 (the “Record Date). Each holder of record of Worthington Enterprises common shares received one common share of Worthington Steel for every one common share of Worthington Enterprises held at the close of business on the Record Date (the “Distribution”). In connection with the Separation, Worthington Steel made a cash distribution of approximately $150 million to the Company. Following the completion of the Separation, Worthington Industries, Inc. changed its name to Worthington Enterprises, Inc. Additionally, following the Separation, the Company’s common shares will continue trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “WOR.” Simultaneously, on December 1, 2023, Worthington Steel became an independent, publicly traded company and its common shares began trading on the NYSE under the ticker symbol “WS.”

In connection with the Separation, the Company entered into several agreements with Worthington Steel on November 30, 2023 that, among other things, provide a framework for the Company’s relationship with Worthington Steel after the Separation, including the following agreements:

 

   

Separation and Distribution Agreement;

 

   

Transition Services Agreement;

 

   

Tax Matters Agreement;

 

   

Employee Matters Agreement;

 

   

Trademark License Agreement;

 

   

WBS License Agreement; and

 

   

Steel Supply Agreement.

A summary of certain material features of the Separation and Distribution Agreement, the Transition Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the Trademark License Agreement, the WBS License Agreement and the Steel Supply Agreement are included below.

The Separation and Distribution Agreement

The Separation and Distribution Agreement sets forth our agreements with Worthington Steel regarding the principal actions taken in connection with the Separation. It also sets forth other agreements that govern certain aspects of our relationship with Worthington Steel following the Separation and Distribution.

Transfer of Assets and Assumption of Liabilities

The Separation and Distribution Agreement identifies assets transferred, liabilities assumed and contracts allocated to each of Worthington Steel and us as part of the Separation, and describes when and how these transfers, assumptions and assignments occurred, though many of the transfers, assumptions and assignments occurred prior to the parties’ entering into the Separation and Distribution Agreement. The Separation and Distribution Agreement provides for those transfers of assets and assumptions of liabilities that are necessary in connection with the Separation so that we and Worthington Steel retain or acquire the assets necessary to operate our respective businesses and retain or assume the liabilities allocated in accordance with the Separation. The Separation and Distribution Agreement also provides for the settlement or extinguishment of certain liabilities and other obligations between us and Worthington Steel. In particular, the Separation and Distribution Agreement provides that, subject to the terms and conditions contained in the Separation and Distribution Agreement:

 

   

“SteelCo Assets” (as defined in the Separation and Distribution Agreement), including, but not limited to, the equity interests of Worthington Steel’s subsidiaries, assets reflected on its pro forma balance sheet and assets primarily (or in the case of intellectual property, business records, rights to indemnification and permits, exclusively) relating to Worthington Steel’s business, are retained by or transferred to Worthington Steel or one of its subsidiaries, except as set forth in the Separation and Distribution Agreement or one of the other agreements described below;


   

“SteelCo Liabilities” (as defined in the Separation and Distribution Agreement), including, but not limited to, the following are retained by or transferred to Worthington Steel or one of its subsidiaries:

 

   

all of the liabilities (whether or not such liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the effective time of the Separation) to the extent related to, arising out of or resulting from Worthington Steel’s business;

 

   

all of the liabilities as of the effective time of the Separation that would have resulted in such liabilities being included or reflected as liabilities or obligations of Worthington Steel or its subsidiaries on its pro forma balance sheet;

 

   

liabilities based upon, relating to or arising from Worthington Steel’s contracts;

 

   

liabilities based upon, relating to or arising from Worthington Steel’s intellectual property;

 

   

liabilities based upon, relating to or arising out of Worthington Steel’s permits;

 

   

liabilities based upon, relating to or arising out of Worthington Steel’s real property leases;

 

   

liabilities based upon, relating to or arising out of Worthington Steel’s owned property;

 

   

liabilities with respect to terminated, divested or discontinued businesses, assets or operations that were of such a nature that they would have been part of Worthington Steel’s business had they not been terminated, divested or discontinued;

 

   

“Environmental Liabilities” (as defined in the Separation and Distribution Agreement) arising at, prior to or after the effective time of the Separation to the extent based upon, relating to or arising from the conduct of Worthington Steel’s business;

 

   

liabilities arising out of claims by any third party against Worthington Steel to the extent relating to, arising out of or resulting from Worthington Steel’s business or its assets; and

 

   

all of our assets and liabilities are retained by us or one of our subsidiaries (other than Worthington Steel or one of its subsidiaries), except as set forth in the Separation and Distribution Agreement or one of the other agreements described below and except for other limited exceptions that result in Worthington Steel retaining or assuming certain other specified liabilities.

The allocation of liabilities with respect to taxes, except for payroll taxes and reporting and other tax matters expressly covered by the Employee Matters Agreement, are generally covered by the Tax Matters Agreement.

Except as expressly set forth in the Separation and Distribution Agreement or any ancillary agreement, all assets were transferred on an “as is,” “where is” basis and the respective transferees bear the economic and legal risks that any conveyance proves to be insufficient to vest in the transferee good title, free and clear of any security interest, that any necessary approvals or notifications are not obtained or made or that any requirements of laws or judgments are not complied with. In general, neither we nor Worthington Steel make any representations or warranties regarding any assets or liabilities transferred or assumed, any consents or approvals that may be required in connection with such transfers or assumptions, or any other matters.


Certain of the liabilities and obligations assumed by one party or for which one party may have an indemnification obligation under the Separation and Distribution Agreement and the other agreements relating to the Separation are, and following the Separation may continue to be, the legal or contractual liabilities or obligations of another party. Each such party that continues to be subject to such legal or contractual liability or obligation will rely on the applicable party that assumed the liability or obligation or the applicable party that undertook an indemnification obligation with respect to the liability or obligation, as applicable, under the Separation and Distribution Agreement, to satisfy the performance and payment obligations or indemnification obligations with respect to such legal or contractual liability or obligation.

Cash Distribution

Pursuant to the Separation and Distribution Agreement, Worthington Steel distributed approximately $150.0 million to us in consideration of the transfer of the SteelCo Assets to Worthington Steel in connection with the Separation. We will use this cash to satisfy certain of our debt obligations.

Further Assurances; Separation of Guarantees

To the extent that any transfers of assets or assumptions of liabilities contemplated by the Separation and Distribution Agreement have not been consummated on or prior to the date of the distribution, each party agrees to use commercially reasonable efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by the Separation and Distribution Agreement and other transaction agreements. Additionally, we and Worthington Steel will use commercially reasonable efforts to remove Worthington Steel and its subsidiaries as a guarantor of liabilities retained by us and our subsidiaries and to remove us and our subsidiaries as a guarantor of liabilities to be assumed by Worthington Steel.

Shared Contracts and Permits

In the event any contract or permit is not a SteelCo Asset and is shared between Worthington Steel and us, such contract or permit remains with us, however the parties are required to take reasonable actions to cause the appropriate party to receive the benefit of the contract or permit after the Separation is complete.

Release of Claims and Indemnification

Except as otherwise provided in the Separation and Distribution Agreement or any ancillary agreement, each party releases and forever discharges the other party and its subsidiaries and affiliates from all liabilities of such party, liabilities arising from, or in connection with, the transactions and other activities to implement the Separation and Distribution and liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the effective time of the Separation (whether or not such liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the effective time of the Separation) to the extent relating to, arising out of or resulting from such party’s business, assets and liabilities. The releases do not extend to obligations or liabilities under any agreements between the parties that remain in effect following the Separation pursuant to the Separation and Distribution Agreement or any ancillary agreement. These releases are subject to certain exceptions set forth in the Separation and Distribution Agreement.

The Separation and Distribution Agreement provides for cross-indemnities that, except as otherwise provided in the Separation and Distribution Agreement, are principally designed to place financial responsibility for the obligations and liabilities allocated to Worthington Steel under the Separation and Distribution Agreement with us and financial responsibility for the obligations and liabilities allocated to us under the Separation and Distribution Agreement. Specifically, each party indemnifies, defends and holds harmless the other party, its affiliates and subsidiaries and each of its past, present and future officers, directors, employees and agents for any losses relating to, arising out of or resulting from, directly or indirectly:

 

   

the liabilities the indemnifying party assumed or retained pursuant to the Separation and Distribution Agreement;


   

any breach by the indemnifying party of the Separation and Distribution Agreement or any ancillary agreement (unless such other ancillary agreement expressly provides for separate indemnification therein);

 

   

any third-party claims that the use of the indemnifying party’s intellectual property by the other party infringes the intellectual property rights of such third-party;

 

   

any guarantee, indemnification or contribution obligation, letter of credit, bond or similar credit support commitment by the other party for the benefit of the indemnifying party; and

 

   

any untrue statement or alleged untrue statement of material fact or omission by such indemnifying party in the Registration Statement on Form 10 filed by Worthington Steel (the “Form 10”), the information statement filed as Exhibit 99.1 to the Form 10, or any other disclosure document.

Each party’s aforementioned indemnification obligations are uncapped; provided that the amount of each party’s indemnification obligations are subject to reduction by any insurance proceeds received by the party being indemnified. The Separation and Distribution Agreement also specifies procedures with respect to claims subject to indemnification and related matters. Indemnification with respect to taxes are governed by the Tax Matters Agreement.

Legal Matters

Except as otherwise set forth in the Separation and Distribution Agreement or any ancillary agreement (or as otherwise described above), each party to the Separation and Distribution Agreement assumes the liability for, and may elect to control, all pending, threatened and future legal matters related to its own business or its assumed or retained liabilities and indemnifies the other party for any liability arising out of or resulting from such legal matters.

Insurance

Following the Separation, Worthington Steel is responsible for obtaining and maintaining at its own cost its own insurance coverage. Additionally, with respect to certain claims arising prior to the Separation, Worthington Steel may seek coverage under our third-party insurance policies in effect prior to the Separation to the extent that coverage may be available thereunder.

No Restriction on Competition

None of the provisions of the Separation and Distribution Agreement include any non-competition or other similar restrictive arrangements with respect to the range of business activities which may be conducted by either party.

No Hire and No Solicitation

Subject to customary exceptions, neither we nor Worthington Steel will, without the consent of the other party, solicit or hire certain employees of the other party or its subsidiaries for one (1) year following the Separation.

Dispute Resolution

If a dispute arises between us and Worthington Steel under the Separation and Distribution Agreement, the parties will first seek to settle the matter amicably by negotiation in the normal course of business at the operational level for a 30-day period. If the parties are unable to resolve the dispute in such manner, executives of the parties will negotiate to resolve such dispute for an additional 30-day period. If the parties are unable to resolve the dispute in this manner then, unless otherwise agreed by the parties and except as otherwise set forth in the Separation and Distribution Agreement, the dispute will be resolved through binding confidential arbitration.


Term/Termination

After the Distribution, the term of the Separation and Distribution Agreement is indefinite and it may only be terminated with the prior written consent of both Worthington Steel and us.

Separation Costs

All costs with respect to the Separation incurred prior to the Separation are borne and paid by us, except as otherwise provided by the Tax Matters Agreement.

All costs with respect to the Separation incurred after the Separation are borne and paid by Worthington Steel except to the extent such fees and expenses were incurred in connection with services expressly requested by and incurred to the direct benefit of the Company. In addition, Worthington Steel bears responsibility for all other services provided to or for the benefit of Worthington Steel, whether provided before or after the Separation.

Any costs or expenses incurred by a party for actions requested by the other party to vest in such party all the transferring party’s right, title and interest to the assets allocated to such party shall be borne by the requesting party.

Treatment of Intercompany Arrangements

Except as otherwise set forth in the Separation and Distribution Agreement, upon completion of the Separation, all intercompany balances, accounts and agreements between us or any of our subsidiaries (other than us and our subsidiaries), on the one hand, and Worthington Steel or any of its subsidiaries, on the other hand, were terminated.

Other Matters Governed by the Separation and Distribution Agreement

Other matters governed by the Separation and Distribution Agreement include, among others, confidentiality, access to and provision of records and treatment of outstanding guarantees and similar credit support.

Tax Matters Agreement

the Tax Matters Agreement governs our and Worthington Steel’s respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes.

In general, Worthington Steel is responsible for all U.S. federal, state, local and foreign taxes that are (i) imposed with respect to tax returns that include both us and Worthington Steel, to the extent such taxes are attributable to Worthington Steel or its businesses for any tax period (or portion thereof) beginning after the Distribution, (ii) imposed with respect to tax returns that include only Worthington Steel (other than certain domestic income tax returns relating solely to tax periods ending on or before the Distribution Date), (iii) that are not required to be reported on a tax return but are attributable to Worthington Steel or its business and (iv) imposed as a result of any audit adjustment or redetermination or otherwise as a result of any tax contest to the extent such taxes are attributable to Worthington Steel or its business for any tax period. Taxes incurred by Worthington Steel or us relating to or arising out of any failure of the intended tax treatment of the Separation or Distribution will generally be shared equally by Worthington Steel and us. If, however, such failure is attributable to certain acts or omissions by Worthington Steel, inaccuracies, misrepresentations or misstatements relating to Worthington Steel or events involving its common shares or assets, Worthington Steel will generally bear such taxes. Worthington Steel also generally bears fifty percent (50%) of other taxes incurred by Worthington Steel or us relating to or arising out of the Separation and Distribution.

The Tax Matters Agreement requires Worthington Steel to comply with the representations, covenants and agreements made to legal counsel in connection with the tax opinion received regarding the intended tax treatment of the Separation and Distribution. The tax matters agreement also restricts Worthington Steel’s ability to take or fail to take any action if such action or failure to act could adversely affect the intended tax treatment. In particular, in the two years following the Distribution, Worthington Steel may be restricted from, among other things, (i) entering into transactions pursuant to which its equity would be issued or acquired, whether by merger or otherwise, (ii) ceasing to actively conduct certain of its businesses or (iii) disposing of more than a threshold amount of assets used in its business, in each case, unless Worthington Steel obtains a waiver from us or receives a private letter ruling


from the IRS or an unqualified opinion of a nationally recognized tax advisor that such action will not cause a failure of the intended tax treatment. Notwithstanding receipt of such ruling or opinion, in the event that such action causes a failure of the intended tax treatment, Worthington Steel could be responsible for taxes arising therefrom.

Worthington Steel’s obligations under the Tax Matters Agreement are not limited in amount or subject to any cap. Further, even if Worthington Steel is not responsible for our tax liabilities under the tax matters agreement, Worthington Steel nonetheless could be liable under applicable tax law for such liabilities if we were to fail to pay them.

Employee Matters Agreement

The Employee Matters Agreement allocates liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs, and other related matters.

Pursuant to the Employee Matters Agreement, from and after the effective time, we assume or retain all liabilities with respect to all of our employees and former employees and all of our compensation and employee benefit plans and arrangements, and Worthington Steel assumes or retains all liabilities with respect to all Worthington Steel employees and former employees and all Worthington Steel compensation and employee benefit plans and arrangements.

Incentive Award Adjustments. Pursuant to the Employee Matters Agreement, Worthington Enterprises incentive awards that are outstanding immediately prior to the Distribution are treated as follows in connection with the Distribution. The number of shares subject to (and in the case of stock options, the exercise price of) each award was adjusted in a manner intended to preserve the intrinsic value of each award immediately prior to the Distribution.

 

   

Stock Options. Effective as of the Distribution Date, each outstanding stock option covering shares of Worthington Enterprises that was held by (i) a current or former employee of Worthington Steel or (ii) by a current or former employee or other service provider of Worthington Enterprises, in each case, was converted into an option denominated in common shares of the entity to which such individual provides (or would have provided, but for such individual’s termination of service) services immediately following the Separation.

 

   

Restricted Stock. Effective as of the Distribution Date, each Worthington Enterprises restricted stock award and that was held by an employee or non-employee director of Worthington Enterprises was converted into a restricted stock award covering Worthington Enterprises shares and each Worthington Enterprises restricted stock award that is held by an employee, non-employee director (excluding any non-employee director who will also serve on the board of Worthington Enterprises immediately following the effective time of the Separation) or independent contractor of Worthington Steel was converted into a restricted stock award covering Worthington Steel shares.

 

   

Performance Awards. Effective as of the Distribution:

 

   

Each performance award with a performance period ending on May 31, 2024 or May 31, 2025 that was held by (i) a Worthington Enterprises employee or (ii) a Worthington Steel employee, who is, or who would be prior to the end of the applicable performance period, retirement eligible was converted into an award covering (x) a number of shares of the holder’s post-Distribution employer and (y) an amount in cash, in each case determined as of immediately prior to the effective time of the Separation based on actual achievement, as of the day immediately prior to the Distribution Date, of adjusted performance metrics, and vests in full as of immediately prior to the effective time and be paid or settled by the holder’s post-Distribution employer no later than March 15 of the year following the year in which such vesting date occurs.

 

   

Each performance award with a performance period ending on May 31, 2024 or May 31, 2025 that was held by (i) a Worthington Enterprises employee or (ii) a Worthington Steel employee who is not, and will not prior to the end of the applicable performance period be, retirement eligible was converted into an award covering (x) a number of shares of the holder’s post-Distribution employer and (y) an amount in cash, in each case based on actual achievement, as of the day immediately prior to the Distribution Date, of adjusted performance metrics and shall continue to be subject to vesting based on the applicable holder’s continued service with his or her post-Distribution employer.


   

Each performance award with a performance period ending on May 31, 2026 that was held by (i) a Worthington Enterprises employee or (ii) a Worthington Steel employee, were converted into an award covering cash and shares of the holder’s post-Distribution employer and will continue to be subject to the same terms and conditions following the effective time as applied to such award prior to the effective time of the Separation, subject to adjustment to the applicable performance goals and/or performance calculation methodology in order to reflect the Separation.

Cash Incentive Programs. Prior to or as soon as reasonably practicable following the Distribution Date, Worthington Steel will adopt programs providing cash incentives, commissions, annual performance bonuses, or similar cash payments that are substantially similar to those maintained by us immediately prior to the Distribution Date. In connection with the Distribution, Worthington Steel assumes responsibility for cash incentive payments to its current and former employees that are earned prior to the Distribution Date under the current Worthington Enterprises programs.

Retirement, Health and Welfare Plans. In connection with the Distribution, Worthington Steel employees will cease to participate in our 401(k) and health and welfare plans, and Worthington Steel will establish 401(k) and health and welfare plans that are substantially similar to Worthington Enterprises’ 401(k) and health and welfare plans for the benefit of Worthington Steel employees.

Non-Qualified Deferred Compensation Plans. In connection with the Distribution, Worthington Steel employees and Worthington Steel directors who cease to serve on our board cease to participate in our non-qualified deferred compensation plans, and Worthington Steel will establish deferred compensation plans for the benefit of such Worthington Steel employees and directors. The account balances of such Worthington Steel employees and directors that are not paid in connection with the Separation will be transferred from the Worthington Enterprises non-qualified deferred compensation plans to the Worthington Steel non-qualified deferred compensation plans.

Transition Services Agreement

Pursuant to the Transition Services Agreement, Worthington Steel and its subsidiaries and we and our subsidiaries will provide to each other various services on a transitional basis. The transition services include various services and functions, many of which currently use a shared technology platform, including human resources, payroll and certain information technology services. The charges for the transition services are generally expected to allow the providing company to fully recover all internal and external costs and expenses it actually incurs in connection with providing the service (including a reasonable allocation of overhead) and are based on pass-through billing, percent of use billing or fixed fee monthly billing.

The transition services are provided in the manner and at a level substantially consistent with that provided by the respective providing company in the 12-month period preceding the Distribution Date. The term for each of the transition services to be provided under the agreement is set forth in the service schedules, and it is anticipated that all of the services will expire within 18 months following the Distribution Date. The transition services are also terminable by the service provider in the event of an uncured payment default by the service recipient, or by the service recipient in the event of an uncured material breach by the service provider. The recipient of a particular service generally can terminate that service prior to the scheduled expiration date, subject to a minimum notice period of 45 days.

Trademark License Agreement

Pursuant to the Trademark License Agreement, we granted Worthington Steel a royalty-free, fully paid-up, perpetual, non-exclusive license to use certain trademarks owned by us in connection with Worthington Steel’s goods and services existing as of the Distribution Date. Worthington Steel is only licensed to use the term


WORTHINGTON as part of the WORTHINGTON STEEL composite mark, and is not permitted to use the term WORTHINGTON in a standalone form. Worthington Steel has the right to grant sublicenses in connection with its business activities, but not for the independent use by third parties. Worthington Steel also has the right to register and renew certain domain names. Worthington Steel is required to comply with our branding guidelines and quality control procedures. We may only terminate the trademark license agreement in the event of Worthington Steel’s uncured breach of the provisions of the agreement relating to ownership, protection or use of the licensed marks. Worthington Steel will indemnify us against any third-party claim arising out of Worthington Steel’s or its sublicensees’ provision of goods and services under the licensed marks and any of its or its sublicensees’ other uses of the licensed marks, except to the extent we are to indemnify Worthington Steel for such claims under the Separation and Distribution Agreement.

WBS License Agreement

Pursuant to the WBS License Agreement, we granted Worthington Steel a worldwide, non-exclusive, royalty-free, non-transferable license to use, solely in support of Worthington Steel’s business, the Worthington Business System (“WBS”). Worthington Steel is able to sublicense such license to its subsidiaries, and to service providers as necessary for their support of its business operations. We license the WBS to Worthington Steel “as-is,” with no warranties, as the WBS exists as of the Distribution. The term of the WBS license agreement is perpetual, with the license to Worthington Steel continuing unless we terminate for Worthington Steel’s material uncured breach of the agreement.

Steel Supply Agreement

Pursuant to the long-term Steel Supply Agreement, Worthington Steel will manufacture and supply us with certain flat rolled steel products ordered by us from time to time, and will provide us with certain related support services such as design, engineering/technical services, price risk management, scrap management, steel purchasing, supply chain optimization and product rework services, and other services at our request that are ancillary to the supply of products. Worthington Steel will manufacture the products in accordance with the agreed-upon specifications and quality requirements, which may be updated from time to time upon our request if Worthington Steel can reasonably accommodate the changes. We will purchase the products and services at prices to be calculated based on an arms’ length pricing mechanism specified in the agreement. We may terminate the steel supply agreement for convenience upon 180 days’ notice, immediately if Worthington Steel undergoes a change of control or upon its material, uncured breach. Worthington Steel may only terminate the steel supply agreement upon our uncured breach of our payment obligations. Worthington Steel will indemnify us against third-party claims arising out of Worthington Steel’s material breach of the agreement, manufacturing defects in the products supplied to us or Worthington Steel’s or its subcontractors’ gross negligence or willful misconduct in connection with the agreement. We will indemnify Worthington Steel against third-party claims arising out of our material breach of the agreement, a design defect in the products Worthington Steel supplies to us arising out of our specifications or our gross negligence or willful misconduct in connection with the agreement.

 

Item 2.01

Completion of Acquisition or Disposition of Assets.

On the Distribution Date, the Company completed the previously announced Separation of Worthington Steel. Effective as of 12:01 a.m., Eastern time, on the Distribution Date, 100% of the outstanding Worthington Steel common shares were distributed, on a pro rata basis, to our shareholders as of the close of business on the Record Date. On the Distribution Date, each of our shareholders received one common share of Worthington Steel for every one common share of the Company held by such shareholder on the Record Date.


Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 1, 2023, Kevin J. Chan, age 42, became Corporate Controller and the chief accounting officer of the Company. Steven R. Witt, who previously served as the Company’s Corporate Controller, assumed the same position with Worthington Steel as part of the Separation.

Mr. Chan joined the Company in November 2010 as Manager of Financial Reporting, and served as Director of Financial Reporting from November 2017 to November 2023. Prior to joining the Company, Mr. Chan served as Manager, External Reporting & Technical Accounting of Cardinal Health, for two years, and spent the three years prior to that in public accounting with KPMG LLP.

Mr. Chan has no family relationships with any of the current executive officers or any of the current directors of the Company. Neither Mr. Chan nor any of his immediate family members has had (nor does any propose to have) a direct or indirect material interest in any transaction in which the Company or any of the Company’s subsidiaries was (or is proposed to be) a participant, that would be required to be disclosed under Item 404(a) of SEC Regulation S-K.

In conjunction with his appointment as Corporate Controller of the Company, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved the following new compensation arrangements for Mr. Chan:

Base Salary and Annual Short-Term Cash Incentive Bonus Award

Effective as of December 1, 2023, the base salary and annual short-term cash incentive bonus award for the twelve-month performance period ending May 31, 2024 for Mr. Chan were increased to the amounts set forth below.

 

   

Short-Term Cash Incentive Bonus Award

for the Period ending May 31, 2024(i)

Annual Base Salary

 

Threshold

 

Target

 

Maximum

$230,000   $57,500   $115,000   $230,000

 

  (i)

The last three columns show the potential payouts (prorated for the portion of the performance period in which Mr. Chan serves in his new role) which can be earned under Mr. Chan’s short-term cash incentive bonus award based on achievement of specified levels of corporate performance for the twelve-month performance period ending May 31, 2024. The payouts which can be earned under the short-term cash incentive bonus award are tied to achieving specified levels (threshold, target and maximum) of corporate economic value added (“EVA”) and earnings per share (“EPS”) for the twelve-month performance period with each performance measure carrying a 50% weighting. For all calculations, restructuring and impairment charges and non-recurring items are to be excluded, and EPS results are to be adjusted to eliminate the impact of inventory holding gains and losses. If the performance level with respect to either performance measure falls between threshold and target or between target and maximum, the portion of the short-term cash incentive bonus award associated with that performance measure is prorated. If the threshold level is not reached for a performance measure, no short-term cash incentive bonus payout will be paid as to that performance measure. Any payouts under the short-term cash incentive bonus award will be made within a reasonable time following the end of the performance period. In the event of a change in control of the Company (followed by actual or constructive termination of Mr. Chan’s employment with the Company during the performance period), the short-term cash incentive bonus award would be considered to be earned and payouts made at target levels.

Long-Term Performance Awards

The Compensation Committee approved increasing the performance share award and the cash performance award for Mr. Chan under the Company’s 1997 Long-Term Incentive Plan for the three-fiscal-year performance period from June 1, 2021 to May 31, 2024 to the following amounts:

 

     Threshold    Target    Maximum

Performance Share Award

   300 shares    600 shares    1,200 shares

Cash Performance Award

   $37,500    $75,000    $150,000

Potential payouts (prorated for the portion of the performance period in which Mr. Chan serves in his new role) in respect of the long-term performance share award and the long-term cash performance award for Mr. Chan are tied to achieving specified levels (threshold, target and maximum) of cumulative corporate EVA for the three-fiscal-year performance period and EPS growth over that performance period, with each performance measure carrying a 50% weighting. Restructuring and impairment charges and non-recurring items are to be excluded, and EPS results are to be adjusted to eliminate the impact of inventory holding gains or losses. If the performance level with respect to either performance measure falls between threshold and target or between target and maximum, the portion of the performance share award or the cash performance award associated with that performance measure is linearly prorated. If the threshold level is not reached for a performance measure, no portion of the cash performance award or the performance share award associated with that performance measure will be paid or distributed.

 

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On December 1, 2023, the Company filed a certificate of amendment to amend its articles of incorporation (the “Amended Articles”) to change the name of the Company from “Worthington Industries, Inc.” to “Worthington Enterprises, Inc.” (the “Name Change”). The Amended Articles became effective on the Distribution Date and are filed as Exhibit 3.1 to this Current Report on Form 8-K.


Item 8.01

Other Events.

On December 1, 2023, the Company issued a press release announcing the completion of the Separation and Distribution and the Name Change. The full text of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference in this Item 8.01.

 

Item 9.01

Financial Statements and Exhibits.

(b) Pro forma financial information.

Worthington Enterprises’ unaudited pro forma condensed consolidated financial statements and related notes thereto, giving effect to the Separation is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

(d) Exhibits.

 

Exhibit
No.
  

Description

  2.1    Separation and Distribution Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
  3.1    Amended Articles of Incorporation of Worthington Enterprises, Inc.
10.1    Transition Services Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
10.2    Tax Matters Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
10.3    Employee Matters Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
10.4    Trademark License Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
10.5    WBS License Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
10.6+    Steel Supply Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
99.1    Press Release of Worthington Enterprises, Inc. dated December 1, 2023.
99.2    Unaudited pro forma condensed consolidated financial statements of Worthington Enterprises, Inc.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

+

Certain portions of this document that constitute confidential information have been redacted in accordance with Regulation S-K, Item 601(b)(10).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 5, 2023

 

WORTHINGTON ENTERPRISES, INC.
By:  

/s/ Patrick J. Kennedy

Name:   Patrick J. Kennedy
Title   Vice President - General Counsel and Secretary

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

BY AND BETWEEN

WORTHINGTON INDUSTRIES, INC.

AND

WORTHINGTON STEEL, INC.

DATED AS OF NOVEMBER 30, 2023

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I. DEFINITIONS

     2  

1.1

  Definitions      2  

1.2

  Interpretation      14  

ARTICLE II. SEPARATION

     14  

2.1

  Transfers of Assets and Assumptions of Liabilities; Worthington Steel Assets; Worthington Assets      14  

2.2

  Nonassignable Contracts and Permits      19  

2.3

  Termination of Intercompany Agreements      20  

2.4

  Treatment of Shared Contracts and Shared Permits      21  

2.5

  Bank Accounts; Cash Balances; Misdirected Payments      21  

2.6

  Worthington Steel Loan Documents; New Worthington Loan Documents; Worthington Steel Share Issuance; Worthington Steel Cash Distribution      23  

2.7

  Misallocated Assets and Liabilities      24  

2.8

  Disclaimer of Representations and Warranties      25  

ARTICLE III. COMPLETION OF THE DISTRIBUTION

     26  

3.1

  Actions Prior to the Distribution      26  

3.2

  Effecting the Distribution      27  

3.3

  Conditions to the Distribution      28  

3.4

  Sole Discretion      29  

ARTICLE IV. DISPUTE RESOLUTION

     30  

4.1

  General Provisions      30  

4.2

  Negotiation by Senior Executives      31  

4.3

  Arbitration      31  

ARTICLE V. MUTUAL RELEASES; INDEMNIFICATION; COOPERATION; INSURANCE

     32  

5.1

  Release of Claims Prior to Distribution      32  

5.2

  Indemnification by New Worthington      34  

5.3

  Indemnification by Worthington Steel      35  

5.4

  Indemnification Obligations Net of Insurance Proceeds      36  

5.5

  Procedures for Indemnification of Third-Party Claims      37  

5.6

  Additional Matters      40  

5.7

  Survival of Indemnities      41  

5.8

  Right of Contribution      41  

5.9

  Covenant Not to Sue (Liabilities and Indemnity)      42  

5.10

  No Impact on Third Parties      42  

 


5.11

  No Cross-Claims or Third-Party Claims      42  

5.12

  Severability      43  

5.13

  Specified Ancillary Agreements      43  

5.14

  Exclusivity      43  

5.15

  Cooperation in Defense and Settlement      43  

5.16

  Insurance Matters      44  

5.17

  Guarantees, Letters of Credit and Other Obligations      46  

ARTICLE VI. EXCHANGE OF INFORMATION; CONFIDENTIALITY

     47  

6.1

  Agreement for Exchange of Information      47  

6.2

  Ownership of Information      47  

6.3

  Compensation for Providing Information      47  

6.4

  Record Retention      48  

6.5

  Limitations of Liability      48  

6.6

  Other Agreements Providing for Exchange of Information      49  

6.7

  Auditors and Audits      49  

6.8

  Privileged Matters      50  

6.9

  Confidentiality      52  

6.10

  Protective Arrangements      54  

6.11

  Witness Services      54  

6.12

  Personal Data      54  

ARTICLE VII. FURTHER ASSURANCES AND ADDITIONAL COVENANTS

     55  

7.1

  Further Assurances      55  

7.2

  Performance      56  

7.3

  No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities      56  

7.4

  Mail Forwarding      57  

7.5

  Non-Disparagement      57  

7.6

  Non-Solicitation Covenant      57  

7.7

  Order of Precedence      57  

7.8

  New Worthington Marks      57  

ARTICLE VIII. INTELLECTUAL PROPERTY LICENSES

     58  

8.1

  License to Worthington Steel      58  

8.2

  License to Worthington      60  

ARTICLE IX. TERMINATION

     62  

9.1

  Termination      62  

9.2

  Effect of Termination      62  

 

ii


ARTICLE X. MISCELLANEOUS

     62  

10.1

  Counterparts; Entire Agreement; Corporate Power      62  

10.2

  Governing Law      63  

10.3

  Assignability      63  

10.4

  Third-Party Beneficiaries      63  

10.5

  Notices      64  

10.6

  Severability      64  

10.7

  Force Majeure      65  

10.8

  Press Release      65  

10.9

  Expenses      65  

10.10

  Late Payments      65  

10.11

  Headings      65  

10.12

  Survival of Covenants      65  

10.13

  Waivers of Default      66  

10.14

  Specific Performance      66  

10.15

  Amendments      66  

10.16

  Construction      66  

10.17

  Performance      66  

10.18

  Limited Liability      67  

10.19

  Exclusivity of Tax Matters      67  

10.20

  Limitations of Liability      67  

Schedules

 

Schedule 1.1A    Ancillary Agreements
Schedule 1.1B    Worthington Steel Permits
Schedule 1.1C    Worthington Steel Properties
Schedule 1.1D    Excluded Intellectual Property
Schedule 1.1E    Specified Ancillary Agreements
Schedule 2.1(b)(iii)    Worthington Steel Equity Interests
Schedule 2.1(b)(xii)    Other Worthington Steel Assets
Schedule 2.1(c)(ix)    Other New Worthington Assets
Schedule 2.1(d)(x)    Environmental Liabilities arising at or after the Effective Time relating to the Worthington Steel Properties
Schedule 2.1(d)(xii)    Other Worthington Steel Liabilities
Schedule 2.1(e)(ii)    New Worthington Liabilities
Schedule 2.3(b)(iii)    Form 10 Agreements
Schedule 2.4(b)    Shared Permits
Schedule 7    Worthington Steel Specified Marks
Schedule 8.2(a)    Worthington Steel Intellectual Property

Exhibits

 

Exhibit A

   Amended and Restated Articles of Incorporation

 

 

iii


SEPARATION AND DISTRIBUTION AGREEMENT

This SEPARATION AND DISTRIBUTION AGREEMENT is entered into effective as of November 30, 2023 (this “Agreement”), by and between Worthington Industries, Inc., an Ohio corporation (“New Worthington”), and Worthington Steel, Inc., an Ohio corporation and wholly owned subsidiary of New Worthington (“Worthington Steel”). New Worthington and Worthington Steel are each a “Party” and are sometimes referred to herein collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I.

R E C I T A L S

WHEREAS, New Worthington owns 100% of the common shares, without par value, of Worthington Steel (the “Worthington Steel Stock”);

WHEREAS, the Board of Directors of New Worthington (the “New Worthington Board”) determined on careful review and consideration that the separation of Worthington Steel from the rest of New Worthington and the establishment of Worthington Steel as a separate, publicly traded company to operate the Worthington Steel Business is in the best interests of New Worthington;

WHEREAS, the Board of Directors of Worthington Steel (the “Worthington Steel Board”) determined on careful review and consideration that the separation of Worthington Steel from the rest of New Worthington and the establishment of Worthington Steel as a separate, publicly traded company to operate the Worthington Steel Business is in the best interests of Worthington Steel;

WHEREAS, in furtherance of the foregoing, the New Worthington Board has determined that it is appropriate and desirable to separate the Worthington Steel Business from the New Worthington Business (the “Separation”) and, following the Separation, to make a distribution of the Worthington Steel Business to the holders of common shares, without par value, of New Worthington (the “New Worthington Stock”) on the Record Date through the distribution of all of the outstanding shares of Worthington Steel Stock to holders of New Worthington on the Record Date on a pro rata basis (the “Distribution”), in each case, on the terms and conditions set forth in this Agreement;

WHEREAS, New Worthington and Worthington Steel have prepared, and Worthington Steel has filed with the SEC, the Form 10, which includes the Information Statement, and which sets forth certain disclosure concerning Worthington Steel, the Separation and the Distribution;

WHEREAS, each of New Worthington and Worthington Steel has determined that it is appropriate and desirable to set forth in this Agreement certain agreements that will govern certain matters relating to the Separation and the Distribution and the relationship of New Worthington, Worthington Steel and the members of their respective Groups following the Distribution;

WHEREAS, the Parties intend that the Distribution, together with certain related transactions, will qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code; and


WHEREAS, this Agreement, together with the Ancillary Agreements and other documents implementing the Distribution and certain related transactions, is intended to be, and is hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulations § 1.368-2(g).

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. For the purpose of this Agreement, the following terms shall have the following meanings:

Action” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any Governmental Authority or in any arbitration or mediation.

Affiliate” means, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that for purposes of this Agreement and the Ancillary Agreements, from and after the Effective Time, (i) no member of the Worthington Steel Group shall be deemed to be an Affiliate of any member of the New Worthington Group, (ii) no member of the New Worthington Group shall be deemed to be an Affiliate of any member of the Worthington Steel Group and (iii) no joint venture formed after the Effective Time solely between one or more members of the Worthington Steel Group, on the one hand, and one or more members of the New Worthington Group, on the other hand, shall be deemed to be an Affiliate of, or owned or controlled by, any member of the Worthington Steel Group or the New Worthington Group for the purposes of this Agreement.

Agent” means Broadridge, as the distribution agent appointed by New Worthington to distribute to the shareholders of New Worthington all of the outstanding shares of Worthington Steel Stock pursuant to the Distribution.

Agreement” shall have the meaning set forth in the Preamble.

Amended Financial Report” shall have the meaning set forth in Section 6.7(b).

Ancillary Agreements” means all Contracts entered into by the Parties or the members of their respective Groups (but to which no Third Party is a party) in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement, including, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreement, the Steel Supply Agreement, the WBS License Agreement, the Trademark License Agreement, the Transfer Documents and the agreements set forth on Schedule 1.1A.

 

2


Approvals or Notifications” means any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Authority.

Assets” means assets, properties, claims and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of the applicable Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement, other than Tax assets (including any Tax items, attributes or rights to receive any Tax refund, credits or other items that cause a reduction in any otherwise required liability for Taxes).

Business Day” means any day that is not a Saturday, Sunday or any other day on which banking institutions located in New York, New York are required or authorized by Law to be closed.

Business Records” means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, ledgers, journals, financial statements, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), Tax Returns, other Tax work papers and files and other documents in whatever form, physical, electronic or otherwise.

Code” means the Internal Revenue Code of 1986, as amended.

Contract” means any written, oral, implied or other contract, agreement, covenant, lease, license, guaranty, indemnity, representation, warranty, assignment, sales order, purchase order, power of attorney, instrument or other commitment, assurance, undertaking or arrangement that is binding on any Person or entity or any part of its property under applicable Law.

Covered Matter” shall have the meaning set forth in Section 5.16(i).

Data Protection Laws” shall mean any and all Laws concerning the privacy, protection and security of personal information Laws throughout the world, including the GDPR and any national law supplementing the GDPR (such as, in the United Kingdom, the Data Protection Act 2018) or any successor laws arising out of the withdrawal of a member state from the European Union, the California Consumer Privacy Act, California Civil Code Title 1.81.5 (including all amendments and implementing regulations), and any regulations, or regulatory requirements, guidance and codes of practice applicable to the Processing of Personal Data (as amended and/or replaced from time to time).

 

3


Director” shall mean, with respect to any member of the Worthington Steel Group or the New Worthington Group, a member of the board of directors or managers, as applicable, of such entity.

Disclosure Document” shall mean any registration statement (including the Form 10) filed with the SEC by or on behalf of any Party or any member of its Group, and also includes any information statement (including the Information Statement), prospectus, offering memorandum, offering circular, periodic report or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, in each case which describes the Separation or the Distribution or the Worthington Steel Group or primarily relates to the transactions contemplated hereby, including the Separation, the Distribution, the Worthington Steel Cash Distribution or the Worthington Steel Loan Documents.

Dispute” shall have the meaning set forth in Section 4.1(a).

Dispute Committee” shall have the meaning set forth in Section 4.2.

Distribution” shall have the meaning set forth in the Recitals.

Distribution Date” means the date on which New Worthington, through the Agent, distributes all of the issued and outstanding shares of Worthington Steel Stock to holders of New Worthington Stock in the Distribution.

Effective Time” means 12:01 a.m. New York time, or such other time as New Worthington may determine, on the Distribution Date.

Employee Matters Agreement” means that certain Employee Matters Agreement to be entered into between New Worthington and Worthington Steel or any members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

Environmental Law” means any Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, including the use, handling, transportation, treatment, storage, disposal, Release or discharge of, or exposure to, Hazardous Materials or the protection of or prevention of harm to human health and safety.

Environmental Liabilities” means all Liabilities relating to, arising out of or resulting from any Hazardous Materials, Environmental Law or Contract relating to environmental, health or safety matters (including all removal, remediation or cleanup costs, investigatory costs, response costs, natural resources damages, property damages, personal injury damages, costs of compliance, including with any product take-back requirements, or with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) and all costs and expenses, interest, fines, penalties or other monetary sanctions in connection therewith.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder, as the same shall be in effect at the time reference is made thereto.

 

4


Excluded Intellectual Property” means the Intellectual Property licensed pursuant to Shared Contracts, the New Worthington Marks and any Intellectual Property listed on Schedule 1.1D.

Force Majeure” means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been reasonably foreseen by such Party (or such Person) or, if it could have been reasonably foreseen, was unavoidable, and includes acts of God, storms, floods, riots, labor unrest, pandemics, nuclear incidents, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities, or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution or transportation facilities. Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

Form 10” means the registration statement on Form 10-12B (File No. 001-41830) filed by Worthington Steel with the SEC to effect the registration of the Worthington Steel Stock pursuant to Section 12(b) of the Exchange Act in connection with the Distribution, including any amendments or supplements thereto.

GDPR” means the General Data Protection Regulation (EU) 2016/679.

Governmental Approvals” means any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

Governmental Authority” means any nation or government, any state, province, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, provincial, regional, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any official thereof.

Group” means either the Worthington Steel Group or the New Worthington Group, as the context requires.

Hazardous Materials” means any chemical, material, substance, waste, pollutant, emission, discharge, release or contaminant that could result in liability under, or that is prohibited, limited or regulated by or pursuant to, any Environmental Law, and any natural or artificial substance (whether solid, liquid or gas, noise, ion, vapor or electromagnetic) that could cause harm to human health or the environment, including petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, medical or infectious wastes, per- and polyfluoroalkyl substances, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances.

ICC Rules” shall have the meaning set forth in Section 4.3(a).

 

5


Indebtedness” means (a) all obligations of such specified Person for borrowed money or arising out of any extension of credit to or for the account of such specified Person (including reimbursement or payment obligations with respect to surety bonds, letters of credit, bankers’ acceptances and similar instruments), (b) all obligations of such specified Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such specified Person upon which interest charges are customarily paid, (d) all obligations of such specified Person under conditional sale or other title retention agreements relating to Assets purchased by such specified Person, (e) all obligations of such specified Person issued or assumed as the deferred purchase price of property or services, (f) all liabilities secured by (or for which any Person to which any such liability is owed has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge or other encumbrance on property owned or acquired by such specified Person (or upon any revenues, income or profits of such specified Person therefrom), whether or not the obligations secured thereby have been assumed by the specified Person or otherwise become liabilities of the specified Person, (g) all capital lease obligations of such specified Person, (h) all securities or other similar instruments convertible or exchangeable into any of the foregoing, but excluding daily cash overdrafts associated with routine cash operations, and (i) any liability of others of a type described in any of the preceding clauses (a) through (h) in respect of which the specified Person has incurred, assumed or acquired a liability by means of a guaranty, excluding any obligations related to Taxes.

Indemnifying Party” shall have the meaning set forth in Section 5.4(a).

Indemnitee” shall have the meaning set forth in Section 5.4(a).

Indemnity Payment” shall have the meaning set forth in Section 5.4(a).

Information” means information, in written, oral, electronic or other tangible or intangible forms, stored in any medium and regardless of location, including technical, financial, employee or business information or data, studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names and records, supplier names and records, customer and supplier lists, customer and vendor data or correspondence, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other financial employee or business information or data, files, papers, tapes, keys, correspondence, plans, invoices, forms, product data and literature, promotional and advertising materials, operating manuals, instructional documents, quality records and regulatory and compliance records.

Information Statement” means the Information Statement attached as an exhibit to the Form 10 and any related documents to be provided to the holders of New Worthington Stock in connection with the Distribution, including any amendment or supplement thereto.

Initial Notice” shall have the meaning set forth in Section 4.2.

 

6


Insurance Proceeds” means those monies: (a) received by an insured Person from any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective; or (b) paid on behalf of an insured Person by any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, on behalf of the insured, in either such case net of any costs or expenses incurred in the collection thereof; provided, however, that with respect to a captive insurance arrangement, Insurance Proceeds shall only include net amounts received by the captive insurer from a Third Party in respect of any captive reinsurance arrangement.

Intellectual Property” means all intellectual property in any and all jurisdictions throughout the world, including all: (a) patents, patent applications and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions, (b) Trademarks, (c) Internet domain name registrations, (d) copyrights, mask works, database rights and design rights, whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions, (e) any intellectual property rights in inventions, formulas, compositions, manufacturing and production processes and techniques, testing information, research and development information, drawings, specifications, designs, plans, trade secrets, confidential information, data, know-how, product designs, methods and processes, testing tools and materials, customer information, marketing materials and market surveys and (f) intellectual property rights arising from or in respect of any Software and social media accounts and handles.

Intended Transferee” shall have the meaning set forth in Section 2.2.

Intended Transferor” shall have the meaning set forth in Section 2.2.

Intercompany” means, with respect to any Contract, balance, arrangement or other legal or financial relationship, established at or prior to the Effective Time, that such Contract, balance, arrangement or other legal or financial relationship is (a) between or among one or more members of the Worthington Steel Group and one or more members of the New Worthington Group, as applicable, or (b) between or among the Worthington Steel Business and the New Worthington Business, even if within the same legal entity (in which case the applicable Contract, balance, arrangement or other legal or financial relationship shall be deemed to be binding as if it was between separate legal entities).

Joint Claims” means any claim or series of related claims under any insurance policy that results or could reasonably be expected to result in the payment of Insurance Proceeds to or for the benefit of both one or more members of the New Worthington Group and one or more members of the Worthington Steel Group.

Law” means any national, supranational, federal, state, provincial, regional, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other legally enforceable requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

 

7


Leased Real Property” means (a) the real property leased, subleased, licensed or otherwise used by New Worthington or any other member of the New Worthington Group and used primarily in the Worthington Steel Business and (b) the real property leased, subleased, licensed or otherwise used by any member of the Worthington Steel Group, in each case as tenant.

Liabilities” means any and all Indebtedness, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, reimbursement obligations in respect of letters of credit, damages, payments, fines, penalties, claims, settlements, judgments, sanctions, costs, expenses, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, reflected on a balance sheet or otherwise, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any Contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking or terms of employment, whether imposed or sought to be imposed by a Governmental Authority, another third Person, or a Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, in each case, including all costs, expenses, interest, attorneys’ fees, disbursements and expenses of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof, in each case (a) including any fines, damages or equitable relief that is imposed in connection therewith and (b) other than Taxes.

Licensed Intellectual Property” means Intellectual Property (other than Trademarks) owned by the New Worthington Group and used or held for use as of the Effective Time in connection with the Worthington Steel Business, but excluding, for the avoidance of doubt, any Worthington Steel Intellectual Property.

Losses” means any and all damages, losses (including diminution in value), deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, interest costs, fines and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement rights hereunder), whether or not involving a Third-Party Claim, other than Taxes.

Misdirected Payment” shall have the meaning set forth in Section 2.5(g).

New Worthington” shall have the meaning set forth in the Preamble.

New Worthington Accounts” shall have the meaning set forth in Section 2.5(a).

New Worthington Assets” shall have the meaning set forth in Section 2.1(c).

New Worthington Board” shall have the meaning set forth in the Recitals.

New Worthington Business” means all businesses and operations (whether or not such businesses or operations are or have been terminated, divested or discontinued) conducted by New Worthington and its Subsidiaries prior to the Effective Time that are not included in the Worthington Steel Business.

New Worthington Business Systems” means certain proprietary business and management operating models, procedures, content and materials owned by New Worthington.

New Worthington Credit Agreement” means the Fourth Amended and Restated Credit Agreement, dated as of September 27, 2023, among Worthington, the foreign subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, PNC Bank, National Association, as administrative agent, JPMorgan Chase Bank, N.A. and Bank of America, N.A., as a syndication agents, and Citibank, N.A. and The Huntington National Bank, as documentation agents, as such agreement may be modified or amended from time to time in accordance with its terms.

New Worthington-Formative Marks” means all Trademarks and domain names owned by New Worthington or any of its Subsidiaries that contain the “Worthington” name, either alone or in combination with other words or elements.

New Worthington Group” means, immediately after the Effective Time, (a) New Worthington and (b) each Subsidiary of New Worthington.

New Worthington Indemnitees” shall have the meaning set forth in Section 5.3.

New Worthington Liabilities” shall have the meaning set forth in Section 2.1(e).

New Worthington Loan Documents” shall mean the Loan Documents (as defined in the New Worthington Credit Agreement).

New Worthington Marks” means all Trademarks and domain names of New Worthington or any of its Subsidiaries other than the Worthington Steel Specified Marks.

New Worthington Personal Data” means Personal Data of the New Worthington Group that is used in or by, or otherwise related to, any New Worthington Business.

NYSE” means the New York Stock Exchange, Inc.

Parties” or “Party” shall have the meaning set forth in the Preamble.

 

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Permit” means all permits, licenses, franchises, authorizations, concessions, certificates, consents, exemptions, approvals, variances, registrations, or similar authorizations from any Governmental Authority.

Person” means any individual, general or limited partnership, corporation, business trust, joint venture, association, company, limited liability company, unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

Personal Data” shall have the meaning set forth in the GDPR.

Prime Rate” shall mean the rate that Bloomberg displays as “Prime Rate by Country United States” on a Bloomberg terminal at PRIMBB Index.

Privileged Information” means any information, in written, oral, electronic or other tangible or intangible forms, including any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), as to which a party or its respective Subsidiaries would be entitled to assert or have a privilege, including the attorney-client and attorney work product privileges.

Processing” shall have the meaning set forth in the GDPR.

Record Date” means 5:00 p.m. New York time on the date to be determined by the New Worthington Board as the record date for determining shareholders of New Worthington entitled to receive shares of Worthington Steel Stock in the Distribution.

Record Holders” means the holders of record of New Worthington Stock as of the Record Date.

Records Facility” shall have the meaning set forth in Section 6.4(a).

Release” means any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous Materials into the environment (including ambient air, surface water, groundwater and surface or subsurface strata).

Representatives” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.

SEC” means the U.S. Securities and Exchange Commission.

Securities Act” means the U.S. Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder, as the same shall be in effect at the time reference is made thereto.

Separation” shall have the meaning set forth in the Recitals.

Shared Contract” shall have the meaning set forth in Section 2.4.

 

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Shared Permit” shall have the meaning set forth in Section 2.4.

Software” means any and all computer programs and software, including any and all software implementation of algorithms, models and methodologies, whether in source code or object code.

Specified Ancillary Agreements” means the agreements set forth on Schedule 1.1E.

Specified Party” shall have the meaning set forth in Section 2.5(g).

Steel Supply Agreement” means that certain Steel Supply and Services Agreement to be entered into between Worthington Steel and New Worthington or any members of their respective Groups in connection with the Distribution or the other transactions contemplated by this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

Stored Records” means Tangible Information held in a Records Facility maintained or arranged for by a party other than the party that owns such Tangible Information.

Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns or controls, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities of such Person, (ii) the total combined equity interests of such Person or (iii) the capital or profit interests, in the case of a partnership of such Person, or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body of such Person.

Tangible Information” means Information that is contained in written, electronic or other tangible forms.

Tax” shall have the meaning set forth in the Tax Matters Agreement.

Tax Matters Agreement” means that certain Tax Matters Agreement to be entered into between New Worthington and Worthington Steel in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

Tax Returns” shall have the meaning set forth in the Tax Matters Agreement.

Third Party” shall have the meaning set forth in Section 5.5(a).

Third-Party Claim” shall have the meaning set forth in Section 5.5(a).

Trademark License Agreement” means that certain Trademark License Agreement to be entered into between New Worthington and Worthington Steel in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

 

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Trademarks” means all trademarks, service marks, trade names, trade dress and logos, including all goodwill associated with any of the foregoing and any and all common law rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing.

Transfer Documents means transfer, contribution, distribution or other similar agreements, bills of sale, special warranty deeds, or local equivalent stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment entered into, as of or prior to the Effective Time, between one or more members of the New Worthington Group, on the one hand, and one or more members of the Worthington Steel Group, on the other hand, as and to the extent necessary to evidence: (a) the transfer, conveyance and assignment of all of such Party’s and the applicable members of its Group’s right, title and interest in and to the Assets to the other Party and the applicable members of its Group in accordance with Section 2.1(a); and (b) the valid and effective assumption of the Liabilities by such Party or the applicable members of its Group in accordance with Section 2.1(a).

Transition Services Agreement” means that certain Transition Services Agreement to be entered into between Worthington Steel and New Worthington or any members of their respective Groups in connection with the Distribution or the other transactions contemplated by this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

 

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WBS License Agreement” means that certain WBS License Agreement to be entered into between New Worthington and Worthington Steel in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, pursuant to which New Worthington will license to Worthington Steel the New Worthington Business Systems, as such agreement may be modified or amended from time to time in accordance with its terms.

Worthington Steel” shall have the meaning set forth in the Preamble.

Worthington Steel Accounts” shall have the meaning set forth in Section 2.5(a).

Worthington Steel Articles of Incorporation” shall have the meaning set forth in Section 3.1(f).

Worthington Steel Assets” shall have the meaning set forth in Section 2.1(b).

Worthington Steel Balance Sheet” means the unaudited pro forma condensed combined balance sheet of the Worthington Steel Group as of August 31, 2023, including the notes thereto, included in the Information Statement.

Worthington Steel Business” means (a) New Worthington’s global “Steel Processing” business segment, consisting of processing carbon flat-rolled steel, producing laser welded solutions and providing electrical steel laminations, and (b) without limiting the foregoing clause (a) any terminated, divested or discontinued businesses, Assets or operations that were of such a nature that they would have been part of the Worthington Steel Business (as described in the foregoing clause (a)) had they not been terminated, divested or discontinued (regardless of whether they ever operated under the “Worthington Steel” name);.

Worthington Steel Business Records” shall have the meaning set forth in Section 2.1(b)(x).

Worthington Steel Cash Distribution” means $150,000,000.

 

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Worthington Steel Contracts” shall mean any Contract to which either Party or any member of its Group is a party or by which it or any member of its Group or any of their respective Assets is bound, whether or not in writing, used or held for use primarily in the conduct of the Worthington Steel Business; provided that Worthington Steel Contracts shall not include (a) any Contract that is contemplated to be retained by New Worthington or any member of the New Worthington Group from and after the Effective Time pursuant to any provision of this Agreement or any Ancillary Agreement or (b) any Contract referenced in Section 2.3(b).

“Worthington Steel Credit Agreement” means the Revolving Credit and Security Agreement, dated as of November 30, 2023, among Worthington Steel, as a borrower, the other borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and PNC Bank, National Association, as agent for the lenders, as such agreement may be modified or amended from time to time in accordance with its terms.

Worthington Steel Group” means, immediately after the Effective Time, (a) Worthington Steel and (b) each Subsidiary of Worthington Steel.

Worthington Steel Indemnitees” shall have the meaning set forth in Section 5.2.

Worthington Steel Intellectual Property” means (a) the Intellectual Property set forth on Schedule 8.2(a), (b) the Worthington Steel Specified Marks, and (c) all other Intellectual Property owned or licensed by New Worthington or any of its Affiliates and exclusively held for use in connection with the Worthington Steel Business as of the Effective Time, in each case together with all rights, priorities and privileges accruing thereunder or pertaining thereto throughout the world (including all rights to sue or otherwise recover for past, present and future infringement thereof), but excluding the Excluded Intellectual Property.

Worthington Steel Leases” means the leases, subleases, licenses or other occupancy agreements covering the Leased Real Property.

Worthington Steel Liabilities” shall have the meaning set forth in Section 2.1(d).

“Worthington Steel Loan Documents” means the Worthington Steel Credit Agreement and the Other Documents (as defined in the Worthington Steel Credit Agreement), each as may be modified or amended from time to time in accordance with its terms.

Worthington Steel Permits” means all Permits owned or licensed by either Party or member of its respective Group (a) exclusively used in the operation of the Worthington Steel Business as of the Effective Time or (b) set forth on Schedule 1.1B.

Worthington Steel Personal Data” means Personal Data of the Worthington Steel Group that is used in or by, or otherwise related to, any New Worthington Business.

 

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Worthington Steel Properties” means the real property set forth on Schedule 1.1C under the heading “Worthington Steel Properties”.

Worthington Steel Specified Marks” means the Trademarks set forth on Schedule 7 .

Worthington Steel Stock” shall have the meaning set forth in the Recitals.

1.2 Interpretation. In this Agreement and any Ancillary Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” “herewith” and words of similar import, and the terms “Agreement” and “Ancillary Agreement” shall, unless otherwise stated, be construed to refer to this Agreement or the applicable Ancillary Agreement as a whole (including all of the Schedules, Exhibits, Annexes and Appendices hereto and thereto) and not to any particular provision of this Agreement or such Ancillary Agreement; (c) Article, Section, Exhibit, Schedule and Appendix references are to the Articles, Sections, Exhibits, Schedules and Appendices to this Agreement (or the applicable Ancillary Agreement) unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation”; (e) the word “or” shall not be exclusive; (f) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” and words of similar import shall all be references to the date first stated in the preamble to this Agreement, regardless of any amendment or restatement hereof; (g) unless otherwise provided, all references to “$” or “dollars” are to United States dollars; and (h) references to the performance, discharge or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability has terms, and if the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

ARTICLE II.

SEPARATION

2.1 Transfers of Assets and Assumptions of Liabilities; Worthington Steel Assets; Worthington Assets.

(a) In order to effect the Separation, the Parties shall, to the extent necessary, cause, and shall, to the extent necessary, cause the members of their respective Groups to cause, (i) the Worthington Steel Group to own, to the extent it does not already own, all of the Worthington Steel Assets and none of the New Worthington Assets, and (ii) the Worthington Steel Group to be liable for, to the extent it is not already liable for, all of the Worthington Steel Liabilities.

(b) For purposes of this Agreement, “Worthington Steel Assets” shall mean:

(i) all Assets of either Party or any member of its Group included or reflected as Assets of the Worthington Steel Group on the Worthington Steel Balance Sheet (including cash, cash equivalents or marketable securities on hand or in bonds (the “Worthington Steel Cash”)), subject to any dispositions of such Assets subsequent to the date of the Worthington Steel Balance Sheet; provided, that the amounts set forth on the Worthington Steel Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of Worthington Steel Assets pursuant to this clause (i);

 

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(ii) all Assets of either Party or any member of its Group as of the Effective Time that are of a nature or type that would have resulted in such Assets being included as Assets of Worthington Steel or members of the Worthington Steel Group as of the Effective Time if a balance sheet, notes and subledgers were to be prepared on a basis consistent with the determination of the Assets included on the Worthington Steel Balance Sheet, it being understood that (x) the Worthington Steel Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of Worthington Steel Assets pursuant to this clause (ii) and (y) the amounts set forth on the Worthington Steel Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of Worthington Steel Assets pursuant to this clause (ii);

(iii) all issued and outstanding capital stock or other equity securities of the Persons set forth on Schedule 2.1(b)(iii) owned by either Party or a member of its respective Group as of the Effective Time;

(iv) all Worthington Steel Contracts and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time;

(v) all Worthington Steel Intellectual Property and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time;

(vi) all Worthington Steel Leases and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time;

(vii) all Worthington Steel Permits and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time;

(viii) without limiting the generality of clauses (i) and (ii), all Worthington Steel Properties, together with all buildings, fixtures and improvements erected thereon;

(ix) all rights, claims, demands, causes of action, judgments, decrees and rights to indemnity or contribution, whether absolute or contingent, contractual or otherwise, in favor of New Worthington or any of its Subsidiaries exclusively related to the Worthington Steel Business, including the right to sue, recover and retain such recoveries and the right to continue in the name of any member of the Worthington Steel Group any pending actions relating to the foregoing, and to recover and retain any damages therefrom;

(x) all Business Records exclusively related to the Worthington Steel Business (the “Worthington Steel Business Records”);

 

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(xi) all Assets of either Party or any member of its respective Group as of the Effective Time that are expressly provided by this Agreement or any Ancillary Agreement as Assets to be transferred to any member of the Worthington Steel Group; and

(xii) all assets set forth on Schedule 2.1(b)(xii).

Notwithstanding the foregoing, the Worthington Steel Assets shall not in any event include any Asset referred to in Section 2.1(c).

(c) For purposes of this Agreement, “New Worthington Assets” shall mean all Assets of either Party or the members of its Group as of the Effective Time, other than the Worthington Steel Assets, including:

(i) all Assets of either Party or any member of its respective Group as of the Effective Time that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets to be retained by any member of the New Worthington Group;

(ii) all Contracts of either Party or any member of its respective Group and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time other than the Worthington Steel Contracts;

(iii) all Intellectual Property of either Party or any member of its respective Group and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time, including the Excluded Intellectual Property, but excluding the Worthington Steel Intellectual Property;

(iv) all Permits of either Party or any member of its Group and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time other than the Worthington Steel Permits;

(v) any Contract granting a party the right to lease, sublease, use or otherwise occupy any real property and all rights, interests or claims of either Party or any member of its respective Group thereunder as of the Effective Time other than the Worthington Steel Leases;

(vi) all real property owned by either Party or any member of its respective Group thereunder as of the Effective Time together with all buildings, fixtures and improvements erected thereon, other than the Worthington Steel Properties together with all buildings, fixtures and improvements erected thereon (“New Worthington Properties”);

(vii) all cash, cash equivalents and marketable securities on hand or in banks, other than Worthington Steel Cash;

(viii) all Business Records other than the Worthington Steel Business Records; and

(ix) all assets set forth on Schedule 2.1(c)(ix).

 

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(d) For purposes of this Agreement, “Worthington Steel Liabilities” shall mean any and all Liabilities relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent that such Liabilities relate to, arise out of or result from the Worthington Steel Business or a Worthington Steel Asset, including:

(i) all Liabilities included or reflected as liabilities or obligations of Worthington Steel or the members of the Worthington Steel Group on the Worthington Steel Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the Worthington Steel Balance Sheet; provided, that the amounts set forth on the Worthington Steel Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of Worthington Steel Liabilities pursuant to this clause (i);

(ii) all Liabilities as of the Effective Time that are of a nature or type that would have resulted in such Liabilities being included or reflected as liabilities or obligations of Worthington Steel or the members of the Worthington Steel Group as of the Effective Time if a balance sheet, notes and subledgers were to be prepared on a basis consistent with the determination of the Liabilities included on the Worthington Steel Balance Sheet, it being understood that (x) the Worthington Steel Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of Worthington Steel Liabilities pursuant to this clause (ii) and (y) the amounts set forth on the Worthington Steel Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of Worthington Steel Liabilities pursuant to this clause (ii);

(iii) any and all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed by Worthington Steel or any other member of the Worthington Steel Group, and all agreements, obligations and Liabilities of any member of the Worthington Steel Group under this Agreement or any of the Ancillary Agreements;

(iv) all Liabilities based upon, relating to or arising from the Worthington Steel Contracts;

(v) all Liabilities based upon, relating to or arising from Intellectual Property to the extent used or held for use in the Worthington Steel Business;

(vi) all Liabilities based upon, relating to or arising from the Worthington Steel Permits;

(vii) all Liabilities with respect to terminated, divested or discontinued businesses, Assets or operations that were of such a nature that they would be or would have been part of the Worthington Steel Business had they not been terminated, divested or discontinued (regardless of whether they ever operated under the “Worthington Steel” name), and all Liabilities of New Worthington related thereto unless such Liabilities are expressly retained by New Worthington pursuant to the terms of this Agreement or the Ancillary Agreements;

 

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(viii) all Liabilities based upon, relating to or arising from all Worthington Steel Leases;

(ix) all Liabilities with respect to the Worthington Steel Properties;

(x) all Environmental Liabilities arising prior to, at or after the Effective Time to the extent relating to, arising out of or resulting from (i) the past, present or future operation, conduct or actions of the Worthington Steel Business (including at any properties that were previously owned or operated in connection with the Worthington Steel Business and any off-site locations at which or to which the Worthington Steel Business disposed of, transported, or arranged for the treatment, storage, handling, disposal or transportation of, any Hazardous Materials), (ii) the past, present or future use of the Worthington Steel Assets, or (iii) the Worthington Steel Properties, including all Liabilities arising out of the matters set forth on Schedule 2.1(d)(x);

(xi) all Liabilities arising out of or resulting from claims made by any Third Party (including New Worthington’s or Worthington Steel’s respective directors, officers, shareholders, employees and agents) against any member of the New Worthington Group or the Worthington Steel Group to the extent relating to, arising out of or resulting from the Worthington Steel Business or the Worthington Steel Assets or the other business, operations, activities or Liabilities referred to in clauses (i) through (xi) above;

(xii) all Liabilities set forth on Schedule 2.1(d)(xii).

(e) For the purposes of this Agreement, “New Worthington Liabilities” means the following Liabilities of either Party or the members of its respective Group:

(i) all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed or retained by New Worthington or any other member of the New Worthington Group, and all agreements, obligations and Liabilities of any member of the New Worthington Group under this Agreement or any of the Ancillary Agreements;

(ii) all Liabilities to the extent (and only to the extent) based upon, relating to or arising from the operation or conduct of the New Worthington Business, including all such Liabilities arising out of the matters set forth on Schedule 2.1(e)(ii), but excluding in all circumstances the Worthington Steel Liabilities;

(iii) all Liabilities with respect to the New Worthington Properties; and

(iv) all Liabilities arising out of or resulting from claims made by any Third Party (including New Worthington’s or Worthington Steel’s respective directors, officers, shareholders, current and former employees and agents) against any member of the New Worthington Group or the Worthington Steel Group to the extent relating to, arising out of or resulting from the New Worthington Business or the New Worthington Assets or the Liabilities referred to in clauses (i) and (ii) above (whether such claims arise, in each case before, at or after the Effective Time).

 

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(f) New Worthington and its Subsidiaries hereby waive compliance by each and every member of the New Worthington Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Worthington Steel Assets to any member of the Worthington Steel Group.

2.2 Nonassignable Contracts and Permits. Notwithstanding anything to the contrary contained herein, this Agreement shall not constitute an agreement to assign any Asset or Liability if an assignment or attempted assignment of the same without the consent of another Person would constitute a breach thereof or in any way impair the rights of a Party thereunder or give to any third party any rights with respect thereto. If any such consent is not obtained or if an attempted assignment would be ineffective or would impair such party’s rights under any such Asset or Liability so that the party entitled to the benefits and responsibilities of such purported transfer (the “Intended Transferee”) would not receive all such rights and responsibilities, then (a) the party purporting to make such transfer (the “Intended Transferor”) shall use commercially reasonable efforts to provide or cause to be provided to the Intended Transferee, to the extent permitted by Law, the benefits of any such Asset or Liability and the Intended Transferor shall promptly pay or cause to be paid to the Intended Transferee when received all moneys received by the Intended Transferor with respect to any such Asset and (b) in consideration thereof the Intended Transferee shall pay, perform and discharge on behalf of the Intended Transferor all of the Intended Transferor’s Liabilities thereunder in a timely manner and in accordance with the terms thereof which it may do without breach and, at the Intended Transferor’s request, the Intended Transferee shall promptly reimburse or prepay (at the Intended Transferor’s election) the Intended Transferor for all amounts paid or due by the Intended Transferor on behalf of the Intended Transferee with respect to such non-assignable Asset or Liability. In addition, the Intended Transferor and the Intended Transferee shall each take such other actions as may be reasonably requested by the other Party in order to place the other Party, insofar as reasonably possible, in the same position as if such Asset had been transferred as contemplated hereby and so all the benefits and burdens relating thereto, including possession, use, risk of loss, Liability, potential for gain and dominion, control and command, shall inure to the Intended Transferee. Without limiting the generality of the foregoing, each of the Parties shall, and shall cause the members of its respective Group to, (i) treat for all Tax purposes any such Asset or Liability as having been transferred to and owned by the Intended Transferee not later than the Effective Time and (ii) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of any audit, review, examination, contest, litigation, investigation or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund)). If and when such consents and approvals are obtained, the transfer of the applicable Asset shall be effected in accordance with the terms of this Agreement insofar as is reasonably possible (taking into account any applicable restrictions or considerations, in each case relating to the contemplated Tax treatment of the transactions contemplated hereby).

 

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2.3 Termination of Intercompany Agreements.

(a) Except as set forth in Section 2.3(b), in furtherance of the releases and other provisions set forth in Article III, New Worthington and each member of the New Worthington Group, on the one hand, and Worthington Steel and each member of the Worthington Steel Group, on the other hand, hereby terminate any and all (i) Intercompany balances and accounts arising out of Intercompany Indebtedness, whether or not in writing, between or among New Worthington or any member of the New Worthington Group or any entity that shall be a member of the New Worthington Group as of the Effective Time, on the one hand, and Worthington Steel or any other member of the Worthington Steel Group, on the other hand, effective as of the Effective Time, such that no Party or any member of its Group shall have any continuing obligation with respect thereto and otherwise in such a manner as New Worthington shall determine in good faith (including by means of dividends, distributions, contribution, the creation or repayment of intercompany debt, increasing or decreasing of cash pool balances or otherwise), and (ii) all Intercompany agreements, arrangements, commitments or understandings, including all obligations to provide goods, services or other benefits, whether or not in writing, between or among New Worthington or any member of the New Worthington Group, on the one hand, and Worthington Steel or any member of the Worthington Steel Group, on the other hand (other than as set forth in Section 2.3(b)), without further payment or performance such that no party thereto shall have any further obligations therefor or thereunder. No such terminated balance, account, agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Effective Time. Each Party shall, at the reasonable request of any other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

(b) The provisions of Section 2.3(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by any of the Parties or any of the members of their respective Groups, including, for the avoidance of doubt, those agreements and instruments entered into in connection with the Worthington Steel Loan Documents or the New Worthington Loan Documents); (ii) any Intercompany balances and accounts arising other than out of Intercompany Indebtedness; (iii) any agreements, arrangements, commitments or understandings filed as an exhibit, whether in preliminary or final form, to the Form 10 or otherwise listed or described on Schedule 2.3(b)(iii); (iv) any agreements, arrangements, commitments or understandings to which any Person other than the Parties and the members of their respective Groups is a party (it being understood that to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such agreements, arrangements, commitments or understandings constitute Worthington Steel Assets, New Worthington Assets, Worthington Steel Liabilities or New Worthington Liabilities, they shall be assigned pursuant to Section 2.1(a) to the extent they are not already held by a member of the applicable Group); (v) any Shared Contracts; and (vi) any other agreements, arrangements, commitments or understandings that this Agreement or any Ancillary Agreement expressly contemplates shall survive the Effective Time.

 

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(c) Each Intercompany balance and account (other than such balances and accounts arising out of Intercompany Indebtedness, which are cancelled pursuant to Section 2.3(a)) outstanding immediately prior to the Effective Time shall be net settled and paid as of the Effective Time within ninety (90) days of the Effective Time by the Party (or the member of its Group) owing such net amount; provided, however, that any receivable or payable arising pursuant to an agreement, arrangement or understanding described in clauses (i), (ii) or (iv) of Section 2.3(b) shall not be included in such net settlement and shall instead be settled in accordance with the terms of such agreement, arrangement or understanding (but in no event later than ninety (90) days after the Effective Time) by the Party (or the member of its Group) owing such net amount.

2.4 Treatment of Shared Contracts and Shared Permits

Subject to applicable Law and except as otherwise provided in any Ancillary Agreement, and without limiting the generality of the obligations set forth in Section 2.1, unless the Parties otherwise agree or the benefits of any Contract or Permit described in this Section 2.4 are expressly conveyed to the applicable Party pursuant to this Agreement or an Ancillary Agreement, (a) any Contract entered into by a member of the New Worthington Group or the Worthington Steel Group with a third party that is not a Worthington Steel Asset, but pursuant to which a member of the Worthington Steel Group, as of the Effective Time, has been provided certain revenues or other benefits or incurred any Liability (any such Contract, a “Shared Contract”) and (b) any Permit set forth on Schedule 2.4(b) (any such permit, a “Shared Permit”), in each case, shall not be assigned in relevant part to the applicable members of the Worthington Steel Group or amended to give the relevant members of the Worthington Steel Group any entitlement to such rights and benefits thereunder; provided, however, that the Parties shall, and shall cause each of the members of their respective Groups to, take such other reasonable and permissible actions to cause to the extent permitted under applicable Law: (i) the relevant member of the Worthington Steel Group to receive the rights and benefits previously provided in the ordinary course of business, consistent with past practice, pursuant to such Shared Contract or Shared Permit; and (ii) the relevant member of the Worthington Steel Group to bear the burden of the applicable Liabilities under such Shared Contract or Shared Permit. Notwithstanding the foregoing, no member of the New Worthington Group shall be required by this Section 2.4 to maintain in effect any Shared Contract or Shared Permit, and no member of the Worthington Steel Group shall have any approval or other rights with respect to any amendment, termination or other modification of any Shared Contract or Shared Permit.

2.5 Bank Accounts; Cash Balances; Misdirected Payments.

(a) Each Party agrees to take, or cause the applicable members of its respective Group to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all Contracts governing each bank and brokerage account, including lockbox accounts, owned by New Worthington or any other member of the New Worthington Group (collectively, the “New Worthington Accounts”) so that such New Worthington Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account, including lockbox accounts, owned by any member of the Worthington Steel Group (collectively, the “Worthington Steel Accounts”) are de-linked from the Worthington Steel Accounts.

(b) Each Party agrees to take, or cause the applicable members of its respective Group to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all Contracts governing the Worthington Steel Accounts so that such Worthington Steel Accounts, if currently linked to a New Worthington Account, are de-linked from the New Worthington Accounts.

 

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(c) It is intended that, following consummation of the actions contemplated by Sections 2.5(a) and 2.5(b), there shall be in place a centralized cash management process pursuant to which (i) the New Worthington Accounts shall be managed centrally and funds collected shall be transferred into one or more centralized accounts maintained by New Worthington and (ii) the Worthington Steel Accounts shall be managed centrally and funds collected shall be transferred into one or more centralized accounts maintained by Worthington Steel. Any cash in the Worthington Steel Accounts after the Effective Time that belongs to any member of the New Worthington Group shall be transferred by the applicable member of the Worthington Steel Group to any member of the New Worthington Group designated by New Worthington. Any cash in the New Worthington Accounts after the Effective Time that belongs to any member of the Worthington Steel Group shall be transferred by the applicable member of the New Worthington Group to any member of the Worthington Steel Group designated by Worthington Steel.

(d) With respect to any outstanding checks issued or payments initiated by New Worthington, Worthington Steel or any of their respective Group members prior to the Effective Time, such outstanding checks and payments shall be honored following the Effective Time by the Person or Group owning the account on which the check is drawn or from which the payment was initiated. In addition, any outstanding checks or payments issued by a third party for the benefit of New Worthington, Worthington Steel or any of their respective Group members prior to the Effective Time shall be honored following the Effective Time and payment shall be made to the party to whom the check or payment was issued.

(e) With respect to the payments described in Section 2.5(d), in the event that:

(i) Worthington Steel or one of its Group members initiates a payment prior to the Effective Time that is honored following the Effective Time, and to the extent such payment relates to the New Worthington Business, then New Worthington shall reimburse Worthington Steel for such payment as soon as reasonably practicable and in no event later than seven (7) days after such payment is honored; or

(ii) New Worthington or one of its Group members initiates a payment prior to the Effective Time that is honored following the Effective Time, and to the extent such payment relates to the Worthington Steel Business, then Worthington Steel shall reimburse New Worthington for such payment as soon as reasonably practicable and in no event later than seven (7) days after such payment is honored.

(f) Prior to or concurrently with the Effective Time, (i) New Worthington shall cause all New Worthington employees to be removed as authorized signatories on all bank accounts maintained by the Worthington Steel Group and (ii) Worthington Steel shall cause all Worthington Steel employees to be removed as authorized signatories on all bank accounts maintained by the New Worthington Group.

(g) As between Worthington Steel and New Worthington (for purposes of this Section 2.5(g), each a “Specified Party”) (and the members of their respective Groups), all payments made to and reimbursements received by either Specified Party (or any member of its Group), in each case after the Effective Time, that relate to a business, Asset or Liability of the other Specified Party (or any member of such other Specified Party’s Group) (each, a “Misdirected

 

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Payment”), shall be held in trust by the recipient Specified Party for the use and benefit of the other Specified Party (or member of such other Specified Party’s Group entitled thereto) (at the expense of the party entitled thereto). Each Specified Party shall maintain an accounting of any such Misdirected Payments received by such Specified Party or any member of its Group, and the Specified Parties shall have a monthly reconciliation, whereby all such Misdirected Payments received by each Specified Party are calculated and the net amount owed to the other Specified Party (or members of the other Specified Party’s Group) shall be paid over to the other Specified Party (for further distribution to the applicable members of such other Specified Party’s Group). If at any time the net amount in respect of Misdirected Payments owed to either Specified Party exceeds $1,000,000, an interim payment of such net amount owed shall be made to the Specified Party entitled thereto within three (3) Business Days of such amount exceeding $1,000,000. Notwithstanding the foregoing, neither Specified Party (nor any of the members of its Group) shall act as collection agent for the other Specified Party (or any of the members of its Group), nor shall either Specified Party (or any members of its Group) act as surety or endorser with respect to non-sufficient funds checks, or funds to be returned in a bankruptcy or fraudulent conveyance action.

2.6 Worthington Steel Loan Documents; New Worthington Loan Documents; Worthington Steel Share Issuance; Worthington Steel Cash Distribution.

(a) Prior to the Effective Time, Worthington Steel entered into the Worthington Steel Loan Documents. Worthington Steel and New Worthington shall cause all conditions relating to the Worthington Steel Credit Agreement to be satisfied prior to or substantially concurrently with the making of the Worthington Steel Cash Distribution. Worthington Steel and New Worthington agree to take all necessary actions to assure that New Worthington and the other members of the New Worthington Group are not obligated with respect to the obligations pursuant to the Worthington Steel Loan Documents as of the Effective Time (or have been fully released and discharged from such obligations no later than the Effective Time).

(b) Prior to the Effective Time, New Worthington entered into the New Worthington Loan Documents and the New Worthington Loan Documents became effective. New Worthington agrees to take all necessary actions to (i) assure that Worthington Steel and the other members of the Worthington Steel Group are not obligated with respect to the obligations pursuant to the New Worthington Loan Documents as of the Effective Time (or have been fully released and discharged from such obligations no later than the Effective Time) and (ii) cause all requirements of the definition of “Permitted Spinoff” (as defined in the New Worthington Credit Agreement) to be satisfied as of the Effective Time.

(c) Prior to the Effective Time, Worthington Steel shall distribute the Worthington Steel Cash Distribution to New Worthington in consideration of the transfer of the Worthington Steel Assets to Worthington Steel pursuant to the Separation. In order to effectuate the Worthington Steel Cash Distribution, Worthington Steel shall, sufficiently prior to the Worthington Steel Cash Distribution, (i) issue irrevocable instructions to each Person necessary to cause financing sources party to the Worthington Steel Loan Documents to fund, on behalf of Worthington Steel, the amount of the Worthington Steel Cash Distribution from the proceeds of the Worthington Steel Loan Documents directly to an account of New Worthington designated by New Worthington and (ii) cause its board of directors to take all corporate and other action, and issue irrevocable

 

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instructions to any Person, as may be necessary to declare and pay the Worthington Steel Cash Distribution to New Worthington. From and after the Effective Time, Worthington Steel shall, to the fullest extent not prohibited by Law, be precluded from asserting in any judicial proceeding, arbitration or otherwise that the foregoing actions and procedures regarding the Worthington Steel Cash Distribution are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator or otherwise that Worthington Steel is bound to have made the Worthington Steel Cash Distribution and use best efforts to pay the Worthington Steel Cash Distribution amount to New Worthington if such amount is not received by New Worthington prior to or at the Effective Time. New Worthington shall deposit and maintain the Worthington Steel Cash Distribution in one or more segregated bank accounts or money market accounts (the “Segregated Accounts”). For the avoidance of doubt, the Segregated Accounts shall not include, and the Worthington Steel Cash Distribution shall not be deposited in, any money market fund, security or investment other than a bank account or money market account. New Worthington will take into account for Tax purposes all items of income, gain, deduction or loss associated with the Segregated Accounts. Within 180 days following the Distribution, New Worthington will transfer from the Segregated Accounts the entire Worthington Steel Cash Distribution, together with all proceeds earned thereon, to (i) New Worthington’s creditors in satisfaction of outstanding New Worthington indebtedness or (ii) to New Worthington’s shareholders in repurchases of, or distributions with respect to, shares of New Worthington common shares. For the avoidance of doubt, the Worthington Steel Cash Distribution and any proceeds earned thereon shall be used for no other purposes than those described in the preceding sentence.

2.7 Misallocated Assets and Liabilities.

(a) In the event that, at any time from and after the Effective Time, either Party discovers that it or another member of its Group is the owner of, receives or otherwise comes to possess or benefit from any Asset (including the receipt of payments made pursuant to Contracts and proceeds from accounts receivable with respect to such Asset) that should have been allocated to a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any deliberate acquisition of Assets from a member of the other Group for value subsequent to the Effective Time), insofar as is reasonably possible (taking into account any applicable restrictions or considerations, in each case relating to the contemplated Tax treatment of the transactions contemplated hereby), such Party shall promptly transfer, or cause to be transferred, such Asset to such member of the other Group, and such member of the other Group shall accept such Asset for no further consideration other than that set forth in this Agreement and such Ancillary Agreement. Prior to any such transfer, such Asset shall be held in accordance with Section 2.2.

(b) In the event that, at any time from and after the Effective Time, either Party discovers that it or another member of its Group is liable for any Liability that should have been allocated to a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any deliberate assumption of Liabilities from a member of the other Group for value subsequent to the Effective Time), insofar as is reasonably possible (taking into account any applicable restrictions or considerations, in each case relating to the contemplated Tax treatment of the transactions contemplated hereby), such Party shall promptly transfer, or cause to be transferred, such Liability to such member of the other Group and such member of the other Group shall assume such Liability for no further consideration than that set forth in this Agreement and such Ancillary Agreement. Prior to any such assumption, such Liabilities shall be held in accordance with Section 2.2.

 

 

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2.8 Disclaimer of Representations and Warranties. EACH OF NEW WORTHINGTON (ON BEHALF OF ITSELF AND EACH MEMBER OF THE NEW WORTHINGTON GROUP) AND WORTHINGTON STEEL (ON BEHALF OF ITSELF AND EACH MEMBER OF THE WORTHINGTON STEEL GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED, ASSUMED OR LICENSED AS CONTEMPLATED HEREBY OR THEREBY (INCLUDING, WITHOUT LIMITATION, ANY ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED, ASSUMED OR LICENSED UNDER THIS ARTICLE II AND ARTICLE III), AS TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, AS TO, IN THE CASE OF INTELLECTUAL PROPERTY, NON-INFRINGEMENT OR ANY WARRANTY THAT ANY SUCH INTELLECTUAL PROPERTY IS “ERROR FREE,” OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SET-OFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED OR LICENSED, AS APPLICABLE, ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, EXCEPT AS OTHERWISE AGREED, BY MEANS OF A QUITCLAIM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE WILL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR MADE OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

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ARTICLE III.

COMPLETION OF THE DISTRIBUTION

3.1 Actions Prior to the Distribution. Following the Separation and prior to the Effective Time, subject to the terms and conditions set forth herein, the Parties shall take, or cause to be taken, the following actions in connection with the Distribution:

(a) Notice to NYSE. New Worthington shall, to the extent possible, give the NYSE not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.

(b) Securities Law Matters. Worthington Steel shall file with the SEC any amendments or supplements to the Form 10 as may be necessary or advisable in order to cause the Form 10 to become and remain effective as required by the SEC or federal, state or other applicable securities Laws. New Worthington and Worthington Steel shall cooperate in preparing, filing with the SEC and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or advisable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. New Worthington and Worthington Steel shall take all such action as may be necessary or advisable under the securities or “blue sky” Laws of the United States (and any comparable Laws under any non-U.S. jurisdiction) in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

(c) Availability of Information Statement. New Worthington shall, as soon as is reasonably practicable after the Form 10 is declared effective under the Exchange Act and the New Worthington Board has approved the Distribution, cause the Information Statement to be mailed to the Record Holders or, in connection with the delivery of a notice of Internet availability of the Information Statement to such holders, posted on the Internet.

(d) The Distribution Agent. New Worthington shall enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.

(e) Stock-Based Employee Benefit Plans. At or prior to the Effective Time, New Worthington and Worthington Steel shall take all actions as may be necessary to approve any applicable awards under the stock-based employee benefit plans of Worthington Steel in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the NYSE.

(f) Amended and Restated Articles of Incorporation. New Worthington and Worthington Steel shall take all necessary action that may be required to provide for the adoption by Worthington Steel of the Amended and Restated Articles of Incorporation of Worthington Steel substantially in the form attached hereto as Exhibit A (the “Worthington Steel Articles of Incorporation”).

(g) Officers and Directors. At the Effective Time, the Parties shall take all necessary action so that, as of the Effective Time, the executive officers and directors of Worthington Steel will be as set forth in the Information Statement.

(h) Financings. Prior to or on the Distribution Date, Worthington Steel and New Worthington and each member of the Worthington Steel Group designated by Worthington Steel shall cause all conditions under the Worthington Steel Loan Documents to the availability of the funding and release of funds to Worthington Steel for the purpose of making the Worthington Steel Cash Distribution to be satisfied.

 

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(i) Satisfying Conditions to the Distribution. New Worthington and Worthington Steel shall cooperate to cause the conditions to the Distribution set forth in Section 3.3 to be satisfied and to effect the Distribution at the Effective Time.

3.2 Effecting the Distribution.

(a) Delivery of Worthington Steel Stock. On or prior to the Distribution Date, New Worthington shall deliver to the Agent, for the benefit of the Record Holders, duly executed transfer forms for such number of the outstanding shares of Worthington Steel Stock as is necessary to effect the Distribution.

(b) Distribution of Shares and Cash. New Worthington shall instruct the Agent to distribute, as soon as practicable following the Effective Time, to each Record Holder the following: (i) one share of Worthington Steel Stock for every one share of New Worthington Stock held by such Record Holder as of the Record Date and (ii) cash, if applicable, in lieu of fractional shares obtained in the manner provided in Section 3.2(c). All of the shares of Worthington Steel Stock distributed will be validly issued, fully paid and non-assessable.

(c) No Fractional Shares. No fractional shares shall be distributed or credited to book-entry accounts in connection with the Distribution. As soon as practicable after the Effective Time, New Worthington shall direct the Agent to determine the number of whole shares and fractional shares of Worthington Steel Stock allocable to each holder of record or beneficial owner of New Worthington Stock as of the Record Date, to aggregate all such fractional shares and to sell the whole shares obtained thereby in open market transactions (with the Agent, in its sole and absolute discretion, determining when, how and through which broker-dealer and at what price to make such sales), and to cause to be distributed to each such holder or for the benefit of each such beneficial owner, in lieu of any fractional share, such holder’s or owner’s ratable share of the proceeds of such sale, after deducting any Taxes required to be withheld and after deducting an amount equal to all brokerage charges, commissions and transfer Taxes attributed to such sale. Neither New Worthington nor Worthington Steel shall be required to guarantee any minimum sale price for the fractional shares of Worthington Steel Stock. Neither New Worthington nor Worthington Steel shall be required to pay any interest on the proceeds from the sale of fractional shares.

(d) Beneficial Owners. Solely for purposes of computing fractional share interests pursuant to Section 3.2(c), the beneficial owner of New Worthington Stock held of record in the name of a nominee in any nominee account shall be treated as the holder of record with respect to such shares.

(e) Transfer Authorizations. Worthington Steel agrees to update its register of members in relation to the transfers of Worthington Steel Stock that New Worthington or the Agent shall require in order to effect the Distribution.

(f) Treatment of Worthington Steel Stock. Until the Worthington Steel Stock is duly transferred in accordance with this Section 3.2 and applicable Law, from and after the Effective Time, Worthington Steel will regard the Persons entitled to receive such Worthington Steel Stock as record holders of Worthington Steel Stock in accordance with the terms of the Distribution without requiring any action on the part of such Persons. Worthington Steel and New Worthington agree that from and after the Effective Time each such holder will be entitled to receive all dividends payable on, and exercise voting rights and all other rights and privileges with respect to, the Worthington Steel Stock then deemed to be held by such holder.

 

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3.3 Conditions to the Distribution. The consummation of the Distribution shall be subject to the satisfaction or waiver by New Worthington in its sole and absolute discretion, of the following conditions:

(a) Approval by New Worthington Board. This Agreement and the transactions contemplated hereby, including the declaration of the Distribution shall have been approved by the New Worthington Board, and such approval shall not have been withdrawn.

(b) Approval by Worthington Steel Board. This Agreement and the transactions contemplated hereby, including the Distribution and the declaration of the Worthington Steel Cash Distribution shall have been approved by the Worthington Steel Board, and such approval shall not have been withdrawn.

(c) Effectiveness of Form 10; Mailing of Information Statement. The Form 10 registering the Worthington Steel Stock shall be effective under the Exchange Act, with no stop order in effect with respect thereto, and the Information Statement included therein shall have been mailed to New Worthington’s shareholders as of the Record Date.

(d) Listing on NYSE. The Worthington Steel Stock to be distributed to the New Worthington shareholders in the Distribution shall have been accepted for listing on the NYSE, subject to official notice of distribution.

(e) Securities Laws. The actions and filings necessary or appropriate under applicable securities Laws in connection with the Distribution shall have been taken or made, and, where applicable, have become effective or been accepted by the applicable Governmental Authority.

(f) Completion of the Separation. The Separation shall have been completed and (i) as of the Effective Time, New Worthington and the other members of the New Worthington Group shall have no further Liability whatsoever under the Worthington Steel Loan Documents (including in connection with any guarantees provided by any member of the New Worthington Group) and (ii) as of the Effective Time, Worthington Steel and the other members of the Worthington Steel Group shall have no further liability whatsoever under the New Worthington Loan Documents (including in connection with any guarantees provided by any member of the Worthington Steel Group).

(g) Payment of the Worthington Steel Cash Distribution. The Worthington Steel Cash Distribution shall have been validly declared and paid by Worthington Steel.

(h) Officer and Director Resignations. New Worthington will have requested the resignation of each person who is an officer or director of Worthington Steel prior to the Distribution Date and who will continue solely as an officer or director of New Worthington following the Distribution Date.

 

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(i) Distribution Agent Agreement. New Worthington will have entered into a Distribution Agent Agreement with, or provided instructions regarding the Distribution to, the Agent.

(j) Execution of Ancillary Agreements. Each of the Ancillary Agreements shall have been duly executed and delivered by the parties thereto.

(k) Governmental Approvals. All material Governmental Approvals, other than with respect to the Shared Permits, necessary to consummate the Distribution and to permit the operation of the Worthington Business and the Worthington Steel Business after the Effective Time, in each case, substantially as conducted on the date hereof, shall have been obtained and be in full force and effect.

(l) No Order or Injunction. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Distribution or any of the related transactions shall be in effect, and no other event outside the control of New Worthington shall have occurred or failed to occur that prevents the consummation of the Distribution or any of the related transactions.

(m) No Circumstances Making Distribution Inadvisable. No events or developments shall have occurred or exist that, in the judgment of the New Worthington Board, in its sole and absolute discretion, make it inadvisable to effect the Distribution or the other transactions contemplated hereby, or would result in the Distribution or the other transactions contemplated hereby not being in the best interest of New Worthington or its shareholders.

(n) Tax Treatment of the Distribution. New Worthington shall have received an opinion of Latham & Watkins LLP regarding the qualification of the Distribution, together with certain related transactions, as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, in form and substance satisfactory to New Worthington in its sole and absolute discretion.

(o) New Worthington Loan Documents. As of the Distribution Date, the transactions contemplated by this Agreement shall constitute a “Permitted Spinoff” (as defined in the New Worthington Credit Agreement).

3.4 Sole Discretion. The foregoing conditions are for the sole benefit of New Worthington and shall not give rise to or create any duty on the part of New Worthington or the New Worthington Board to waive or not waive such conditions or in any way limit New Worthington’s right to terminate this Agreement as set forth in Article IX or alter the consequences of any such termination from those specified in such Article. Any determination made by the New Worthington Board prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in Section 3.3 shall be conclusive.

 

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ARTICLE IV.

DISPUTE RESOLUTION

4.1 General Provisions.

(a) Any dispute, controversy or claim arising out of or relating to this Agreement or the Ancillary Agreements, including with respect to (i) the validity, interpretation, performance, breach or termination thereof or (ii) whether any Asset or Liability not specifically characterized in this Agreement or its Schedules, whose proper characterization is disputed, is a Worthington Steel Asset, New Worthington Asset, Worthington Steel Liability or Worthington Liability, shall be resolved in accordance with the procedures set forth in this Article IV (a “Dispute”), which shall be the sole and exclusive procedures for the resolution of any such Dispute unless otherwise specified in this Article IV or Article V; provided, however, notwithstanding the foregoing, this Article IV shall not apply to any Ancillary Agreement regarding the lease or sublease of real property following an assignment of such agreement or any of the rights or obligations thereunder to a Third Party.

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE ANCILLARY AGREEMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY BASED UPON, RELATING TO OR ARISING FROM THIS AGREEMENT AND ANY OF THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.1(B).

(c) The specific procedures set forth in this Article IV, including the time limits referenced herein, may be modified by agreement of both of the Parties in writing.

(d) Commencing with the Initial Notice contemplated by Section 4.2, all applicable statutes of limitations and defenses based upon the passage of time shall be tolled while the procedures specified in this Article IV are pending. The Parties shall take any necessary or appropriate action required to effectuate such tolling.

(e) Commencing with the Initial Notice contemplated by Section 4.2, any communications between the Parties or their representatives in connection with the attempted negotiation of any Dispute shall be deemed to have been delivered in furtherance of a Dispute settlement and shall be exempt from disclosure and production, and shall not be admissible into evidence for any reason (whether as an admission or otherwise), in any arbitral or other proceeding for the adjudication of any Dispute; provided, that evidence that is otherwise subject to disclosure or admissible shall not be rendered outside the scope of disclosure or inadmissible as a result of its use in the negotiation.

 

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4.2 Negotiation by Senior Executives. The Parties shall seek to settle amicably all Disputes by negotiation. The Parties shall first attempt in good faith to resolve the Dispute by negotiation in the normal course of business at the operational level within fifteen (15) days after written notice is received by either Party regarding the existence of a Dispute (the “Initial Notice”). If the Parties are unable to resolve the Dispute within such fifteen (15)-day period, the Parties shall attempt in good faith to resolve the Dispute by negotiation between executives designated by the Parties who hold, at a minimum, the office of Senior Vice President and/or General Counsel (such designated executives, the “Dispute Committee”). The Parties agree that the members of the Dispute Committee shall have full and complete authority on behalf of their respective Parties to resolve any Disputes submitted pursuant to this Section 4.2. Such Dispute Committee members and other applicable executives shall meet in person or by teleconference or video conference within thirty (30) days of the date of the Initial Notice to seek a resolution of the Dispute. In the event that the Dispute Committee and other applicable executives are unable to agree to a format for such meeting, the meeting shall be convened in person at a mutually acceptable location in Columbus, Ohio.

4.3 Arbitration.

(a) Any Dispute not finally resolved pursuant to Section 4.2 within sixty (60) days from the delivery of the Initial Notice shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (the “ICC Rules”).

(b) Unless otherwise agreed by the Parties in writing, any Dispute to be decided in arbitration hereunder shall be decided (i) before a sole arbitrator if the amount in dispute, inclusive of all claims and counterclaims, totals less than $10,000,000; or (ii) by an arbitral tribunal of three (3) arbitrators if the amount in dispute, inclusive of all claims and counterclaims, is equal to or greater than $10,000,000.

(c) The language of the arbitration shall be English. The place of arbitration shall be Columbus, Ohio.

(d) The sole arbitrator or arbitral tribunal shall not award any relief not specifically requested by the Parties and, in any event, shall not award any damages of the types prohibited under Section 10.20.

(e) In addition to the ICC Rules, the Parties agree that the arbitrator(s) and the Parties shall be guided by the IBA Rules on the Taking of Evidence in International Arbitration.

(f) The agreement to arbitrate any Dispute set forth in this Section 4.3 shall continue in full force and effect subsequent to, and notwithstanding the completion, expiration or termination of, this Agreement.

 

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(g) Without prejudice to this binding arbitration agreement, each Party to this Agreement irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of Ohio and the federal courts sitting within the State of Ohio in connection with any post-award proceedings or court proceedings in aid of arbitration that are authorized by the Federal Arbitration Act (9 U.S.C. §§ 1-16) or Ohio Arbitration Act (Chapter 2711 of the Ohio Revised Code, R.C. §§ 2711.01 through 2711.24). Judgment upon any awards rendered by the arbitrator may be entered in any court having jurisdiction thereof. The Parties waive all objections that they may have at any time to the laying of venue of any proceedings brought in such courts, waive any claim that such proceedings have been brought in an inconvenient forum and further waive the right to object with respect to such proceedings that any such court does not have jurisdiction over such Party.

(h) It is the intent of the Parties that the agreement to arbitrate any Dispute set forth in this Section 4.3 shall be interpreted and applied broadly such that all reasonable doubts as to arbitrability of a Dispute shall be decided in favor of arbitration.

(i) The Parties agree that any Dispute submitted to arbitration shall be governed by, and construed and interpreted in accordance with Laws of the State of Ohio, as provided in Section 7.2 and, except as otherwise provided in this Article IV or mutually agreed to in writing by the Parties, the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., shall govern any arbitration between the Parties pursuant to this Section 4.3.

(j) The sole arbitrator or arbitral tribunal shall award to the prevailing Party, if any, the costs of the arbitrator or tribunal, expert witness fees, and attorneys’ fees reasonably incurred by such prevailing Party or its Affiliates in connection with the arbitration.

(k) The Parties undertake to keep confidential any arbitration conducted under this Article IV, including the existence of the arbitration, all orders and awards in the arbitration, and all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another Party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a Party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a court or other judicial authority.

ARTICLE V.

MUTUAL RELEASES; INDEMNIFICATION; COOPERATION; INSURANCE

5.1 Release of Claims Prior to Distribution.

(a) Except as provided in Section 5.1(c), effective as of the Effective Time, New Worthington does hereby, for itself and each other member of the New Worthington Group, their respective Affiliates, successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the New Worthington Group (in each case, in their respective capacities as such), surrender, relinquish, release and forever discharge (i) Worthington Steel, the respective members of the Worthington Steel Group, their respective Affiliates, successors and assigns, and (ii) all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the Worthington Steel Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, in each case from (A) all New Worthington Liabilities whatsoever, (B) all Liabilities arising from, or in connection with, the transactions and all other activities to implement

 

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the Separation and Distribution and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the New Worthington Business, the New Worthington Assets or New Worthington Liabilities.

(b) Except as provided in Section 5.1(c), effective as of the Effective Time, Worthington Steel does hereby, for itself and each other member of the Worthington Steel Group, their respective Affiliates, successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the Worthington Steel Group (in each case, in their respective capacities as such), surrender, relinquish, release and forever discharge (i) New Worthington, the respective members of the New Worthington Group, their respective Affiliates (other than any member of the Worthington Steel Group), successors and assigns, and (ii) all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the New Worthington Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, in each case from (A) all Worthington Steel Liabilities whatsoever, (B) all Liabilities arising from, or in connection with, the transactions and all other activities to implement the Separation and Distribution and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case of this clause (C), to the extent relating to, arising out of or resulting from the Worthington Steel Business, the Worthington Steel Assets or the Worthington Steel Liabilities.

(c) Nothing contained in Section 5.1(a) or (b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.3(b) or (c) or the applicable schedules hereto as not to terminate as of the Effective Time, in each case in accordance with its terms. Nothing contained in Section 5.1(a) or (b) shall release any Person from:

(i) any Liability provided in or resulting from any agreement among any members of the Worthington Steel Group or the New Worthington Group that is specified in Section 2.3(b) or (c) as not to terminate as of the Effective Time, or any other Liability specified in such Section 2.3(b) or (c) as not to terminate as of the Effective Time;

(ii) any Liability provided in or resulting from any Contract or understanding that is entered into after the Effective Time between any member of the New Worthington Group, on the one hand, and any member of the Worthington Steel Group, on the other hand;

(iii) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with this Agreement or any Ancillary Agreement (including any Worthington Liability and any Worthington Steel Liability, as applicable); or

 

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(iv) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement, any Specified Ancillary Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article V and Article VI and any other applicable provisions of this Agreement or the applicable Specified Ancillary Agreement.

(d) In addition, nothing contained in Section 5.1(a) or (b) shall release New Worthington from honoring its obligations to indemnify any person who was a director, officer or employee of a member of the New Worthington Group or the Worthington Steel Group on or prior to the Effective Time, to the extent that such director, officer or employee becomes a named defendant in any Action with respect to which such director, officer or employee was entitled to indemnification by New Worthington immediately prior to the Effective Time pursuant to indemnification obligations existing as of the Effective Time; it being understood that, if the underlying obligation giving rise to such Action is a Worthington Steel Liability, Worthington Steel shall indemnify New Worthington for such Liability (including New Worthington’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article V.

(e) New Worthington shall not make, and shall not permit any member of the New Worthington Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Worthington Steel or any member of the Worthington Steel Group, or any other Person released pursuant to Section 5.1(a), with respect to any Liabilities released pursuant to Section 5.1(a). Worthington Steel shall not make, and shall not permit any member of the Worthington Steel Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against New Worthington or any member of the New Worthington Group, or any other Person released pursuant to Section 5.1(b), with respect to any Liabilities released pursuant to Section 5.1(b).

(f) Notwithstanding Section 4.3(j), any breach of the provisions of this Section 5.1 by either New Worthington or Worthington Steel shall entitle the other Party to recover reasonable fees and expenses of counsel in connection with such breach or any Action resulting from such breach.

5.2 Indemnification by New Worthington. Except as otherwise specifically set forth in this Agreement or any Specified Ancillary Agreement, to the fullest extent permitted by Law, New Worthington shall, and shall cause the other members of the New Worthington Group to, indemnify, defend and hold harmless Worthington Steel, each member of the Worthington Steel Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Worthington Steel Indemnitees”), from and against any and all Liabilities of the Worthington Steel Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):

(a) any New Worthington Liabilities, including any failure of New Worthington or any other member of the New Worthington Group or any other Person to pay, perform or otherwise promptly discharge any New Worthington Liabilities in accordance with their respective terms, whether prior to or after the Effective Time or the date hereof;

 

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(b) any breach by New Worthington or any member of the New Worthington Group of this Agreement or any of the Ancillary Agreements (other than the Specified Ancillary Agreements);

(c) any third-party claims that the use of the Worthington Steel Intellectual Property by any member of the New Worthington Group (or their permitted sublicensees) pursuant to this Agreement or otherwise infringes the Intellectual Property rights of such third party, other than any such claims in connection with the performance by any member of the New Worthington Group of its contractual obligations for the benefit of any member of the Worthington Steel Group pursuant to the Transition Services Agreement or any other agreement between a member of the New Worthington Group and a member of the Worthington Steel Group;

(d) except to the extent that it relates to a Worthington Steel Liability, any guarantee, indemnification or contribution obligation, letter of credit reimbursement obligations, surety, bond or other credit support agreement, arrangement, commitment or understanding for the benefit of New Worthington or any member of the New Worthington Group by Worthington Steel or any member of the Worthington Steel Group that survives following the Effective Time; and

(e) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Form 10, the Information Statement (as amended or supplemented if Worthington Steel shall have furnished any amendments or supplements thereto) or any other Disclosure Document specifically relating to (i) the New Worthington Business, New Worthington Assets or New Worthington Liabilities or (ii) the New Worthington Group as of and after the Effective Time.

Notwithstanding the foregoing, in no event shall New Worthington or any other member of the New Worthington Group have any obligations under this Section 5.2 with respect to Liabilities subject to indemnification pursuant to Section 5.3.

5.3 Indemnification by Worthington Steel. Except as otherwise specifically set forth in this Agreement or any Specified Ancillary Agreement, to the fullest extent permitted by Law, Worthington Steel shall, and shall cause the other members of the Worthington Steel Group to, indemnify, defend and hold harmless New Worthington, each member of the New Worthington Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “New Worthington Indemnitees”), from and against any and all Liabilities of the New Worthington Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):

(a) any Worthington Steel Liabilities, including any failure of Worthington Steel or any other member of the Worthington Steel Group or any other Person to pay, perform or otherwise promptly discharge any Worthington Steel Liabilities in accordance with their respective terms, whether prior to or after the Effective Time or the date hereof;

 

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(b) any breach by Worthington Steel or any member of the Worthington Steel Group of this Agreement or any Ancillary Agreements, including the failure by Worthington Steel to pay the Worthington Steel Cash Distribution to New Worthington (other than the Specified Ancillary Agreements);

(c) any third-party claims that the use of the Licensed Intellectual Property by any member of the Worthington Steel Group (or their permitted sublicensees) pursuant to this Agreement or otherwise infringes the Intellectual Property rights of such third party;

(d) any guarantee, indemnification or contribution obligation, letter of credit reimbursement obligations, surety, bond or other credit support agreement, arrangement, commitment or understanding for the benefit of Worthington Steel or any member of the Worthington Steel Group by New Worthington or any member of the New Worthington Group that survives following the Effective Time; and

(e) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Form 10, the Information Statement (as amended or supplemented if Worthington Steel shall have furnished any amendments or supplements thereto) or any other Disclosure Document, other than the matters described in Section 5.2(e).

5.4 Indemnification Obligations Net of Insurance Proceeds.

(a) The Parties intend that any Liability subject to indemnification or contribution pursuant to this Article V shall be net of Insurance Proceeds that actually reduce the amount of the Liability. Accordingly, the amount that any Party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification or contribution hereunder (an “Indemnitee”) shall be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Liability. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds, then the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b) It is expressly agreed and understood that all rights to indemnification, contribution and reimbursement pursuant to this Article V are in excess of all available insurance. Without limiting the foregoing, the Parties agree that an insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of any provision contained in this Agreement or any Ancillary Agreement, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other Third Party shall be entitled to a “windfall” (i.e., a benefit they would not be entitled to receive in the absence of the indemnification provisions hereof) by virtue of the Liability allocation,

 

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indemnification and contribution provisions hereof. Accordingly, any provision herein that could have the result of giving any insurer or other Third Party such a “windfall” shall be suspended or amended to the extent necessary to not provide such “windfall.” Each Party shall, and shall cause the members of its Group to, use commercially reasonable efforts (taking into account the probability of success on the merits and the cost of expending such efforts, including attorney’s fees and expenses) to collect or recover, or allow the Indemnifying Party to collect or recover, any Insurance Proceeds that may be collectible or recoverable respecting the Liabilities for which indemnification or contribution may be available under this Article V. The Indemnitee shall make available to the Indemnifying Party and its counsel all employees, books and records, communications, documents, items or matters within its knowledge, possession or control that are necessary, appropriate or reasonably deemed relevant by the Indemnifying Party with respect to the recovery of such Insurance Proceeds; provided, however, that nothing in this sentence shall be deemed to require a Party to make available books and records, communications, documents or items that (i) in such Party’s good faith judgment could result in a waiver of any privilege even if the Parties cooperated to protect such privilege as contemplated by this Agreement or (ii) such Party is not permitted to make available because of any Law or any confidentiality obligation to a Third Party, in which case such Party shall use commercially reasonable efforts to seek a waiver of or other relief from such confidentiality restriction. Notwithstanding the foregoing, an Indemnifying Party may not delay making any indemnification payment required under the terms of this Agreement, or otherwise satisfying any indemnification obligation, pending the outcome of any Action to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or contribution or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Ancillary Agreement.

(c) Each of Worthington Steel and New Worthington shall, and shall cause the members of its Group to, when appropriate, use commercially reasonable efforts to obtain waivers of subrogation for each of the insurance policies described in Section 5.16. Each of Worthington Steel and New Worthington hereby waives, for itself and each member of its Group, its rights to recover against the other Party in subrogation or as subrogee for a third Person.

(d) For all claims as to which indemnification is provided under Section 5.2 or 5.3 other than Third-Party Claims (as to which Section 5.5 shall apply), the reasonable fees and expenses of counsel to the Indemnitee for the enforcement of the indemnity obligations shall be borne by the Indemnifying Party.

5.5 Procedures for Indemnification of Third-Party Claims.

(a) If, at or after the date of this Agreement, an Indemnitee shall receive written notice from, or otherwise learn of the assertion by, a Person (including any Governmental Authority) who is not a member of the New Worthington Group or the Worthington Steel Group (a “Third Party”) of any claim or of the commencement by any such Person of any Action (collectively, a “Third-Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 5.2 or 5.3, or any other Section of this Agreement or, subject to Section 5.13, any Specified Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof within fourteen (14) days of receipt of such written notice. Any such notice shall describe the Third-Party Claim in reasonable detail and include copies of all notices and documents (including court papers) received by the Indemnitee

 

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relating to the Third-Party Claim. Notwithstanding the foregoing, the failure of an Indemnitee to provide notice in accordance with this Section 5.5(a) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent to which the Indemnifying Party was prejudiced by the Indemnitee’s failure to provide notice in accordance with this Section 5.5(a).

(b) Subject to the terms and conditions of any applicable insurance policy in place after the Effective Time, an Indemnifying Party may elect to defend (and to seek to settle or compromise), at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel; provided, that the Indemnifying Party will not select counsel without the Indemnitee’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed); provided, further, an Indemnifying Party may not elect to defend such Third-Party Claim in the event that defense of such Third Party Claim would void or otherwise adversely impact the Indemnitee’s insurance policy. Within thirty (30) days after the receipt of notice from an Indemnitee in accordance with Section 5.5(a) (or sooner, if the nature of such Third-Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its election whether the Indemnifying Party shall assume responsibility for defending such Third-Party Claim. After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third-Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense of such Indemnitee except as otherwise expressly set forth herein.

(c) If an Indemnifying Party has elected to assume the defense of a Third-Party Claim, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third-Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred during the course of its defense of such Third Party Claim, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim, is not permitted to elect to defend a Third-Party Claim pursuant to Section 5.5(b), or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a notice from an Indemnitee, such Indemnitee shall have the right to control the defense of such Third-Party Claim, in which case the Indemnifying Party shall be liable for all reasonable fees and expenses incurred by the Indemnitee in connection with the defense of such Third-Party Claim.

(d) Notwithstanding an election by an Indemnifying Party to defend a Third-Party Claim in circumstances where an Indemnifying Party is permitted to make such an election pursuant to Section 5.5(b), an Indemnitee may, upon notice to the Indemnifying Party, elect to take over the defense of such Third-Party Claim if (i) in its exercise of reasonable business judgment, the Indemnitee determines that the Indemnifying Party is not defending such Third-Party Claim competently or in good faith, (ii) the Indemnitee determines in its exercise of reasonable business judgment that there exists a compelling business reason for such Indemnitee to defend such Third-Party Claim (other than as contemplated by the foregoing clause (i)), (iii) the Indemnifying Party makes a general assignment for the benefit of creditors, has filed against it or files a petition in bankruptcy or insolvency or is declared bankrupt or insolvent or declares that it is bankrupt or insolvent, or (iv) there occurs a change of control of the Indemnifying Party. In addition to the foregoing and the last sentence of Section 5.2(b), if any Indemnitee determines in good faith that

 

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such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as appropriate) and to participate in (but not control) the defense, compromise, or settlement of the applicable Third-Party Claim, and the Indemnifying Party shall bear the reasonable fees and expenses of one such counsel and local counsel (as appropriate) for all Indemnitees.

(e) An Indemnitee that does not conduct and control the defense of any Third-Party Claim, or an Indemnifying Party that has failed to elect to defend or that is not permitted to elect or defend pursuant to Section 5.5(b), any Third-Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as appropriate) of its own choosing to monitor and participate in (but not control) the defense of any Third-Party Claim for which it is a potential Indemnitee or Indemnifying Party, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 5.5(c) shall not apply to such fees and expenses. Notwithstanding the foregoing, such Party shall cooperate with the Party entitled to conduct and control the defense of such Third-Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto as are reasonably required by the controlling Party. In addition to the foregoing and the last sentence of Section 5.2(b), if any Indemnitee shall in good faith determine that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as appropriate) and to participate in (but not control) the defense, compromise or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of one such counsel and local counsel (as appropriate) for all Indemnitees.

(f) Neither Party may settle or compromise any Third-Party Claim for which either Party is seeking to be indemnified hereunder without the prior written consent of the other Party, which consent may not be unreasonably withheld, unless such settlement or compromise is solely for monetary damages, does not involve any finding or determination of Liability, wrongdoing or violation of Law by the other Party and provides for a full, unconditional and irrevocable release of the other Party, the members of the other Party’s respective Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing from all Liability in connection with the Third-Party Claim. The Parties hereby agree that if a Party presents the other Party with a written notice containing a proposal to settle or compromise a Third-Party Claim for which either Party is seeking to be indemnified hereunder and the Party receiving such proposal does not respond in any manner to the Party presenting such proposal within thirty (30) days (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Party receiving such proposal shall be deemed to have consented to the terms of such proposal.

(g) The provisions of this Section 5.5 (other than this Section 5.5(g)) and the provisions of Section 5.6 (other than Section 5.6(f)) shall not apply to Taxes (Taxes being governed by the Tax Matters Agreement).

 

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(h) The Indemnifying Party shall establish a procedure reasonably acceptable to the Indemnitee to keep the Indemnitee reasonably informed of the progress of the Third-Party Claim and to notify the Indemnitee when any such Third-Party Claim is closed, regardless of whether such Third-Party Claim was resolved by settlement, verdict, dismissal or otherwise.

5.6 Additional Matters.

(a) Indemnification payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification under this Article V shall be paid by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification payment, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. THE COVENANTS AND OBLIGATIONS CONTAINED IN THIS ARTICLE V SHALL REMAIN OPERATIVE AND IN FULL FORCE AND EFFECT, REGARDLESS OF (I) ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY INDEMNITEE AND (II) THE KNOWLEDGE BY THE INDEMNITEE OF LIABILITIES FOR WHICH IT MIGHT BE ENTITLED TO INDEMNIFICATION HEREUNDER.

(b) Any claim on account of a Liability that does not result from a Third-Party Claim shall be asserted by written notice given by the Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If after such thirty (30)-day period, such claim is not resolved, Indemnitee shall be free to pursue such remedies as may be available to such party as contemplated by this Agreement and the Specified Ancillary Agreements. Notwithstanding the foregoing, the failure of an Indemnitee to provide notice in accordance with this Section 5.6(b) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent to which the Indemnifying Party shall demonstrate that it was materially prejudiced by the Indemnitee’s failure to provide notice in accordance with this Section 5.6(b).

(c) In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third-Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third-Party Claim against any claimant or plaintiff asserting such Third-Party Claim or against any other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(d) In the event of an Action for which indemnification is sought pursuant to Section 5.2 or 5.3 and in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall use commercially reasonable efforts to substitute the Indemnifying Party for the named defendant for the portion of the Action related to such indemnification claim.

 

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(e) In the event that either Party establishes a risk accrual in an amount of at least $1,000,000 with respect to any Third-Party Claim for which the other Party has sought indemnification pursuant to Section 5.3, such Party shall notify the other Party of the existence and amount of such risk accrual (i.e., when the accrual is recorded in the financial statements as an accrual for a potential liability), subject to the Parties entering into an appropriate agreement with respect to the confidentiality and/or privilege thereof.

(f) Unless otherwise required by applicable Law, the Parties will treat any indemnity payment made pursuant to this Agreement or any Ancillary Agreement by New Worthington to Worthington Steel, or vice versa, in the same manner as if such payment were a non-taxable distribution or capital contribution, as the case may be, made immediately prior to the Distribution, except to the extent that New Worthington and Worthington Steel treat a payment as the settlement of an Intercompany liability; provided, however, that any such payment that is made or received by a Person other than New Worthington or Worthington Steel, as the case may be, shall be treated as if made or received by the payor or the recipient as agent for New Worthington or Worthington Steel, in each case as appropriate.

(g) In the case of any Action involving a matter contemplated by Section 5.15(c), (i) if there is a conflict of interest that under applicable rules of professional conduct would preclude legal counsel for one Party or one of its Subsidiaries representing another Party or one of its Subsidiaries or (ii) if any Third-Party Claim seeks equitable relief that would restrict or limit the future conduct of the non-responsible Party or one of its Subsidiaries or the business or operations of such non-responsible Party or one of its Subsidiaries, then the non-responsible Party shall be entitled to retain, at its expense, separate legal counsel to represent its interest and to participate in the defense, compromise, or settlement of that portion of the Third-Party Claim against that Party or one of its Subsidiaries.

(h) THE RELEASES AND INDEMNIFICATION OBLIGATIONS OF THE PARTIES IN THIS AGREEMENT ARE EXPRESSLY INTENDED, AND SHALL OPERATE AND BE CONSTRUED, TO APPLY EVEN WHERE THE LIABILITIES FOR WHICH THE RELEASE AND/OR INDEMNITY ARE GIVEN ARE CAUSED, IN WHOLE OR IN PART, BY THE SOLE, JOINT, JOINT AND SEVERAL, CONCURRENT, CONTRIBUTORY, ACTIVE OR PASSIVE NEGLIGENCE OR THE STRICT LIABILITY OR FAULT OF THE PARTY BEING RELEASED OR INDEMNIFIED.

5.7 Survival of Indemnities. The rights and obligations of each of Worthington Steel and New Worthington and their respective Indemnitees under this Article V shall survive (a) the sale or other transfer by any Party of any Assets or businesses or the assignment by it of any Liabilities, and (b) any merger, consolidation, business combination, sale of all or substantially all of the Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any of its respective Subsidiaries.

5.8 Right of Contribution.

(a) Contribution. If any right of indemnification contained in this Article V is held unenforceable or is unavailable for any reason, or is insufficient to hold harmless an Indemnitee in respect of any Liability for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts (including any costs, expenses, attorneys’ fees, disbursements and expenses of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof) paid or payable by the Indemnitees as a result of such Liability (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the members of its Group, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.

 

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(b) Allocation of Relative Fault. Solely for purposes of determining relative fault pursuant to this Section 5.8 in circumstances in which the indemnification is unavailable because of a fault associated with the business conducted by Worthington Steel, New Worthington or a member of their respective Groups, (i) any fault associated with the business conducted with the New Worthington Assets or New Worthington Liabilities (except for the gross negligence or intentional misconduct of Worthington Steel or a member of the Worthington Steel Group) or with the ownership, operation or activities of the New Worthington Business shall be deemed to be the fault of New Worthington and the members of the New Worthington Group, and no such fault shall be deemed to be the fault of Worthington Steel or a member of the Worthington Steel Group; and (ii) any fault associated with the business conducted with the Worthington Steel Assets or the Worthington Steel Liabilities (except for the gross negligence or intentional misconduct of New Worthington or the members of the New Worthington Group) or with the ownership, operation or activities of the Worthington Steel Business shall be deemed to be the fault of Worthington Steel and the members of the Worthington Steel Group, and no such fault shall be deemed to be the fault of New Worthington or the members of the New Worthington Group.

(c) Contribution Procedures. The provisions of Sections 5.5 and 5.6 shall govern any contribution claims.

5.9 Covenant Not to Sue (Liabilities and Indemnity). Each Party hereby covenants and agrees that none of it, the members of such Party’s Group or any Person claiming through it shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, mediator or administrative agency anywhere in the world, alleging that: (a) the assumption of any Worthington Steel Liabilities by Worthington Steel or a member of the Worthington Steel Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; or (b) the provisions of this Article V are void or unenforceable for any reason.

5.10 No Impact on Third Parties. For the avoidance of doubt, except as expressly set forth in this Agreement, the indemnifications provided for in this Article V are made only for purposes of allocating responsibility for Liabilities between the Worthington Steel Group, on the one hand, and the New Worthington Group, on the other hand, and are not intended to, and shall not, affect any obligations to, or give rise to any rights of, any third parties.

5.11 No Cross-Claims or Third-Party Claims. Each of New Worthington and Worthington Steel agrees that it shall not, and shall not permit the members of its respective Group to, in connection with any Third-Party Claim, assert as a counterclaim or third-party claim against any member of the Worthington Steel Group or New Worthington Group, respectively, any claim (whether sounding in contract, tort or otherwise) that arises out of or relates to this Agreement, any breach or alleged breach hereof, the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the date hereof), or the construction, interpretation, enforceability or validity hereof, which in each such case shall be asserted only as contemplated by Article IV.

 

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5.12 Severability. If any indemnification provided for in this Article V is determined by the sole arbitrator or arbitral tribunal (as the case may be) to be invalid, void or unenforceable, the liability shall be apportioned between the Indemnitee and the Indemnifying Party as determined in a separate proceeding in accordance with Article IV.

5.13 Specified Ancillary Agreements. Notwithstanding anything in this Agreement to the contrary, to the extent any Specified Ancillary Agreement contains any indemnification obligation or contribution obligation relating to any Worthington Steel Liability, New Worthington Liability, Worthington Steel Asset or New Worthington Asset contributed, assumed, retained, transferred, delivered, conveyed or governed pursuant to such Specified Ancillary Agreement or any Loss under such Specified Ancillary Agreement, as applicable, the indemnification obligations and contribution obligations contained herein shall not apply to such Worthington Steel Liability, New Worthington Liability, Worthington Steel Asset or New Worthington Asset or to such Loss and instead the indemnification obligations and/or contribution obligations set forth in such Specified Ancillary Agreement, as applicable, shall govern with regard to such Worthington Steel Liability, Worthington Liability, Worthington Steel Asset or New Worthington Asset or such Loss.

5.14 Exclusivity. Except as otherwise provided in Section 10.14, the sole and exclusive remedy for any and all claims, Liabilities or other matters based upon, relating to or arising from this Agreement or any Ancillary Agreement (other than the Specified Ancillary Agreements) or the transactions contemplated hereby or thereby shall be the rights of indemnification set forth in this Article V, and no Person shall have any other entitlement, remedy or recourse, whether in contract, tort, strict liability, equitable remedy or otherwise, it being agreed that all of such other remedies, entitlements and recourse are expressly waived and released by the Parties to the fullest extent permitted by Law. This Section 5.14 shall not operate to interfere with or impede the operation of the covenants contained in this Agreement or any Ancillary Agreement (other than the Specified Ancillary Agreements), with respect to a Party’s right to seek equitable remedies (including specific performance or injunctive relief).

5.15 Cooperation in Defense and Settlement.

(a) With respect to any Third-Party Claim that implicates both Parties in a material fashion due to the allocation of Liabilities, responsibilities for management of defense and related indemnities pursuant to this Agreement or any of the Ancillary Agreements, the Parties agree to use commercially reasonable efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for the Parties the attorney-client privilege, joint defense or other privilege with respect thereto).

(b) To the extent there are documents, other materials, access to employees or witnesses related to or from a Party that is not responsible for the defense or Liability of a particular Action, such Party shall provide to the other Party (at such other Party’s cost and expense) reasonable access to documents, other materials, employees, and shall permit employees, officers and directors to cooperate as witnesses in the defense of such Action.

 

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(c) Each of Worthington Steel and New Worthington agrees that at all times from and after the Effective Time, if an Action currently exists or is commenced by a Third Party with respect to which a Party (or the members of its Group) is a named defendant, but the defense of such Action and any recovery in such Action is otherwise not a Liability allocated under this Agreement or any Ancillary Agreement to that Party, then the other Party shall use commercially reasonable efforts to cause the named but not liable defendant to be removed from such Action and such defendants shall not be required to make any payments or contributions therewith.

5.16 Insurance Matters.

(a) The Parties intend by this Agreement that, to the extent permitted under the terms of any applicable insurance policy, Worthington Steel, each other member of the Worthington Steel Group and each of their respective directors, officers and employees will be successors in interest and/or additional insureds and will have and be fully entitled to continue to exercise all rights that any of them may have as of the Effective Time (with respect to events occurring or claimed to have occurred before the Effective Time) as a Subsidiary, Affiliate, division, director, officer or employee of New Worthington before the Effective Time under any insurance policy, including any rights that Worthington Steel, any other member of the Worthington Steel Group or any of its or their respective directors, officers, or employees may have as an insured or additional named insured, Subsidiary, Affiliate, division, director, officer or employee to avail itself, himself or herself of any policy of insurance or any agreements related to the policies in effect before the Effective Time, with respect to events occurring before the Effective Time.

(b) After the Effective Time, New Worthington (and each other member of the New Worthington Group) and Worthington Steel (and each other member of the Worthington Steel Group) shall not, without the consent of Worthington Steel or New Worthington, respectively (such consent not to be unreasonably withheld, conditioned or delayed), provide any insurance carrier with a release or amend, modify or waive any rights under any insurance policy if such release, amendment, modification or waiver thereunder would materially adversely affect any rights of any member of the Group of the other Party with respect to insurance coverage otherwise afforded to such other Party for pre-Distribution claims; provided, however, that the foregoing shall not (i) preclude any member of any Group from presenting any claim or from exhausting any policy limit, (ii) require any member of any Group to pay any premium or other amount or to incur any Liability or (iii) require any member of any Group to renew, extend or continue any policy in force.

(c) The provisions of this Agreement are not intended to relieve any insurer of any Liability under any policy.

(d) No member of the New Worthington Group or any New Worthington Indemnitee will have any Liabilities whatsoever as a result of the insurance policies as in effect at any time before the Effective Time, including as a result of (i) the level or scope of any insurance, (ii) the creditworthiness of any insurance carrier, (iii) the terms and conditions of any policy, or (iv) the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim.

 

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(e) Except to the extent otherwise provided in Section 5.16(b), in no event will New Worthington, any other member of the New Worthington Group or any New Worthington Indemnitee have any Liability or obligation whatsoever to any member of the Worthington Steel Group if any insurance policy is terminated or otherwise ceases to be in effect for any reason, is unavailable or inadequate to cover any Liability of any member of the Worthington Steel Group for any reason whatsoever or is not renewed or extended beyond the current expiration date of any such insurance policy.

(f) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any members of the New Worthington Group in respect of any insurance policy or any other contract or policy of insurance.

(g) Nothing in this Agreement will be deemed to restrict any member of the Worthington Steel Group from acquiring at its own expense any other insurance policy in respect of any Liabilities or covering any period. Worthington Steel will acquire its own insurance policies covering the Worthington Steel Group and each of their respective directors, officers and employees with respect to events occurring after the Effective Time.

(h) To the extent that any insurance policy provides for the reinstatement of policy limits, and both New Worthington and Worthington Steel desire to reinstate such limits, the cost of reinstatement will be shared by New Worthington and Worthington Steel as the Parties may agree. If either Party, in its sole discretion, determines that such reinstatement would not be beneficial, that Party shall not contribute to the cost of reinstatement and will not make any claim thereunder nor otherwise seek to benefit from the reinstated policy limits.

(i) For purposes of this Agreement, “Covered Matter” shall mean any matter, whether arising before or after the Effective Time, with respect to which any Worthington Steel Indemnitee may seek to exercise any right under any insurance policy pursuant to this Section 5.16. If Worthington Steel receives notice or otherwise learns of any Covered Matter, Worthington Steel shall promptly give New Worthington written notice thereof. Any such notice shall describe the Covered Matter in reasonable detail. With respect to each Covered Matter and any Joint Claim, New Worthington shall have sole responsibility for reporting the claim to the insurance carrier and will provide a copy of such report to Worthington Steel. If New Worthington or another member of the New Worthington Group fails to notify Worthington Steel within fifteen (15) days that it has submitted an insurance claim with respect to a Covered Matter or Joint Claim, Worthington Steel shall be permitted to submit (on behalf of the applicable Worthington Steel Indemnitee) such insurance claim.

(j) Each of Worthington Steel and New Worthington will share such information as is reasonably necessary in order to permit the other Party to manage and conduct its insurance matters in an orderly fashion and provide the other Party with any assistance that is reasonably necessary or beneficial in connection with such Party’s insurance matters.

 

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5.17 Guarantees, Letters of Credit and Other Obligations.

(a) On or prior to the Effective Time or as soon as practicable thereafter, New Worthington shall (with the reasonable cooperation of the applicable members of the New Worthington Group) use its commercially reasonable efforts to have any members of the Worthington Steel Group removed as guarantor of or obligor for any Worthington Liability. On or prior to the Effective Time or as soon as practicable thereafter, Worthington Steel shall (with the reasonable cooperation of the applicable members of the Worthington Steel Group) use its commercially reasonable efforts to have any members of the New Worthington Group removed as guarantor of or obligor for any Worthington Steel Liabilities.

(b) On or prior to the Effective Time or as soon as practicable thereafter, (i) to the extent required to obtain a release from a guarantee, letter of credit or other obligation of any member of the Worthington Steel Group with respect to New Worthington Liabilities, New Worthington shall execute a substitute document in the form of any such existing guarantee or letter of credit, as applicable, or such other form as is agreed to by the relevant parties to such guarantee agreement, letter of credit or other obligation, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which New Worthington would be reasonably unable to comply or (B) which would be reasonably expected to be breached and (ii) to the extent required to obtain a release from a guarantee, letter of credit or other obligation of any member of the New Worthington Group with respect to Worthington Steel Liabilities, Worthington Steel shall execute a substitute document in the form of any such existing guarantee or letter of credit, as applicable, or such other form as is agreed to by the relevant parties to such guarantee agreement, letter of credit or other obligation, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which Worthington Steel would be reasonably unable to comply or (B) which would be reasonably expected to be breached.

(c) If the Parties are unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) and (b) of this Section 5.17, (i) with respect to New Worthington Liabilities, (A) New Worthington shall, and shall cause the other members of the New Worthington Group to, indemnify, defend and hold harmless each of the Worthington Steel Indemnitees from and against any Liability arising from or relating to such guarantee, letter of credit or other obligation, as applicable, and shall, as agent or subcontractor for the applicable Worthington Steel Group guarantor or obligor, pay, perform and discharge fully all of the obligations or other Liabilities of such guarantor or obligor thereunder, and (B) New Worthington shall not, and shall cause the other members of the New Worthington Group not to, agree to renew or extend the term of, increase any obligations under, or transfer to a third Person, any loan, guarantee, letter of credit, lease, contract or other obligation for which a member of the Worthington Steel Group is or may be liable unless all obligations of the members of the Worthington Steel Group with respect thereto are thereupon terminated by documentation satisfactory in form and substance to Worthington Steel in its sole and absolute discretion and (ii) with respect to Worthington Steel Liabilities, (A) Worthington Steel shall, and shall cause the other members of the Worthington Steel Group to, indemnify, defend and hold harmless each of the New Worthington Indemnitees for any Liability arising from or relating to such guarantee, letter of credit or other obligation, as applicable, and shall, as agent or subcontractor for the applicable New Worthington Group guarantor or obligor, pay, perform and discharge fully all of the obligations or other Liabilities of such guarantor or obligor thereunder, and (B) Worthington Steel shall not, and shall cause the other members of the Worthington Steel Group not to, agree to renew or extend the

 

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term of, increase any obligations under, or transfer to a third Person, any loan, guarantee, letter of credit, lease, contract or other obligation for which a member of the New Worthington Group is or may be liable unless all obligations of the members of the New Worthington Group with respect thereto are thereupon terminated by documentation satisfactory in form and substance to New Worthington in its sole and absolute discretion.

ARTICLE VI.

EXCHANGE OF INFORMATION; CONFIDENTIALITY

6.1 Agreement for Exchange of Information. Except as otherwise provided in any Ancillary Agreement, each of New Worthington and Worthington Steel, on behalf of itself and the members of its respective Group, shall use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party, at any time before or after the Effective Time, as soon as reasonably practicable after written request therefor, any Information (or a copy thereof) in the possession or under the control of either Party or any of the members of its Group to the extent that: (i) such Information relates to the Worthington Steel Business or any Worthington Steel Asset or Worthington Steel Liability, if Worthington Steel is the requesting party, or to the New Worthington Business or any New Worthington Asset or New Worthington Liability, if New Worthington is the requesting party; (ii) such Information is required by the requesting party to comply with its obligations under this Agreement or any Ancillary Agreement; or (iii) such Information is required by the requesting party to comply with any obligation imposed by any Governmental Authority, applicable law, rule, professional standard, regulation, policy statement, court order, legal, judicial, or administrative process, other similar process (whether by oral questions, interrogatories, requests for information or documents in legal or regulatory proceedings, subpoena, civil investigative demand, or other similar process, or by the Securities and Exchange Commission or the New York Stock Exchange or any other regulatory or self-regulatory authority); provided, however, that, in the event that the Party to whom the request has been made determines that any such provision of Information could be commercially detrimental, violate any Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence. The Party providing Information pursuant to this Section 6.1 shall only be obligated to provide such Information in the form, condition and format in which it then exists and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such Information, and nothing in this Section 6.1 shall expand the obligations of the Parties under Section 6.4.

6.2 Ownership of Information. Any Information owned by one Group that is provided to a requesting Party pursuant to Section 6.1 or 6.7 shall remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

6.3 Compensation for Providing Information. The Party requesting Information agrees to reimburse the other Party for the reasonable out-of-pocket costs, if any, of gathering, copying, transporting and otherwise complying with the request with respect to such Information (including any costs and expenses incurred in any review of Information for purposes of protecting the privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested Information). Except as may be otherwise specifically provided elsewhere in this Agreement, any Ancillary Agreement or any other agreement between the Parties, such costs shall reflect the providing Party’s actual costs and expenses.

 

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6.4 Record Retention.

(a) The Parties agree and acknowledge that following the Effective Time, it is likely that each Party will have some of the Tangible Information of the other Party stored at its facilities or at Third Party records storage locations arranged for by such Party (each, a “Records Facility”) and the cost of any Third Party Records Facility where Tangible Information belonging to both members of the Worthington Steel Group, on the one hand, and members of the New Worthington Group, on the other hand, is stored shall be split equitably between the Worthington Steel Group and the New Worthington Group.

(b) Each Party shall use the same degree of care (but no less than a reasonable degree of care) as it takes to preserve confidentiality for its own similar Information: (i) to maintain the Stored Records at its Record Facility in accordance with its regular records retention policies and procedures and the terms of this Section 6.4; and (ii) to comply with the requirements of any “litigation hold” that relates to Stored Records at its Record Facility that relates to (x) any Action that is pending as of the Effective Time or (y) any Action that arises or becomes threatened or reasonably anticipated after the Effective Time as to which the Party storing such Stored Records has received a written notice of the applicable “litigation hold” from the other Party; provided, that such other Party shall be obligated to provide the Party storing such Stored Records with timely notice of the termination of such “litigation hold.”

(c) Each Party shall, from time to time, at the reasonable request of the other Party, provide such other Party with technical assistance and information in respect to any claims brought against such other Party involving the conduct of the Worthington Steel Business or the New Worthington Business, as applicable, prior to the Effective Time, including by making available employees of such Party’s Group and consultation and appearances of such persons on a reasonable basis as expert or fact witnesses in trials or administrative proceedings. The Party receiving such assistance and information shall reimburse the other Party for its reasonable out-of-pocket costs (travel, hotels, etc.) of providing such services, consistent with the receiving Party’s policies and practices regarding such expenditures.

6.5 Limitations of Liability. No Party shall have any liability to any other Party relating to or arising out of (a) any Information exchanged or provided pursuant to Section 6.1 that is found to be inaccurate in the absence of willful misconduct by the Party providing such Information or (b) the destruction of any Information after commercially reasonable efforts by such Party to comply with the provisions of Section 6.4.

 

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6.6 Other Agreements Providing for Exchange of Information.

(a) The rights and obligations granted under this Article VI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth herein or any Ancillary Agreement.

(b) Either Party that receives, pursuant to a request for Information in accordance with this Article VI, Tangible Information that is not relevant to its request shall (i) return it to the providing Party or, at the providing Party’s request, destroy such Tangible Information and (ii) deliver to the providing Party a certificate certifying that such Tangible Information was returned or destroyed, as the case may be, which certificate shall be signed by an authorized Representative of the requesting Party.

(c) When any Tangible Information provided by one Party to the other Party (other than Tangible Information provided pursuant to Section 6.4) is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement or is no longer required to be retained by applicable Law, the receiving Party shall promptly, after request of the other Party, either return to the other Party all Tangible Information in the form in which it was originally provided (including all copies thereof and all notes, extracts or summaries based thereon) or, if the providing Party has requested that the other Party destroy such Tangible Information, certify to the other Party that it has destroyed such Tangible Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, that this obligation to return or destroy such Tangible Information shall not apply to any Tangible Information solely related to the receiving Party’s business, Assets, Liabilities, operations or activities.

6.7 Auditors and Audits.

(a) Until the first Worthington Steel fiscal year end occurring after the Effective Time and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs, each Party shall provide or provide access to the other Party on a timely basis, all information reasonably required to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements and for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated by the SEC and, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder.

 

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(b) In the event a Party restates any of its financial statements that include such Party’s audited or unaudited financial statements with respect to any balance sheet date or period of operation as of the end of and for the 2023 fiscal year and the five (5) year period ending May 31, 2023, such Party will deliver to the other Party a substantially final draft, as soon as the same is prepared, of any report to be filed by such first Party with the SEC that includes such restated audited or unaudited financial statements (the “Amended Financial Report”); provided, however, that such first Party may continue to revise its Amended Financial Report prior to its filing thereof with the SEC, which changes will be delivered to the other Party as soon as reasonably practicable; provided, further, however, that such first Party’s financial personnel will actively consult with the other Party’s financial personnel regarding any changes which such first Party may consider making to its Amended Financial Report and related disclosures prior to the anticipated filing of such report with the SEC, with particular focus on any changes which would have an effect upon the other Party’s financial statements or related disclosures. Each Party will reasonably cooperate with, and permit and make any necessary employees available to, the other Party, in connection with the other Party’s preparation of any Amended Financial Reports.

6.8 Privileged Matters.

(a) The Parties recognize that legal and other professional services that have been and shall be provided prior to the Effective Time have been and shall be rendered for the collective benefit of each of the members of the New Worthington Group and the Worthington Steel Group, and that each of the members of the New Worthington Group and the Worthington Steel Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges and immunities that may be asserted under applicable Law in connection therewith. The Parties recognize that legal and other professional services will be provided after the Effective Time, which services will be rendered solely for the benefit of the New Worthington Group or the Worthington Steel Group, as the case may be.

(b) The Parties agree as follows:

(i) New Worthington shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the New Worthington Business, whether or not the Privileged Information is in the possession or under the control of a member of the New Worthington Group or the Worthington Steel Group; New Worthington shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any New Worthington Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of a member of the New Worthington Group or the Worthington Steel Group;

(ii) Worthington Steel shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the Worthington Steel Business, whether or not the Privileged Information is in the possession or under the control of a member of the New Worthington Group or the Worthington Steel Group; Worthington Steel shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any Worthington Steel Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of a member of the New Worthington Group or the Worthington Steel Group; and

 

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(iii) If the Parties do not agree as to whether certain information is Privileged Information, then such information shall be treated as Privileged Information, and the Party that believes that such information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such information until such time as it is finally judicially determined that such information is not Privileged Information or unless the Parties otherwise agree. The Parties shall use the procedures set forth in Article IV to resolve any Disputes as to whether any information relates solely to the New Worthington Business, solely to the Worthington Steel Business, or to both the New Worthington Business and the Worthington Steel Business.

(c) Subject to Sections 6.8(d) and 6.8(e), the Parties agree that they shall have a shared privilege or immunity with respect to all privileges not allocated pursuant to Section 6.8(b) and all privileges and immunities relating to any Actions or other matters that involve both Parties (or one or more members of their respective Groups) and in respect of which both Parties have Liabilities under this Agreement, and that no such shared privilege or immunity may be waived by either Party without the written consent of the other Party.

(d) If any dispute arises between the Parties, or any member of their respective Groups, regarding whether a privilege or immunity should be waived to protect or advance the interests of either Party and/or any member of their respective Groups, each Party agrees that it shall: (i) negotiate with the other Party in good faith, (ii) endeavor to minimize any prejudice to the rights of the other Party and (iii) not unreasonably withhold consent to any request for waiver by the other Party. Further, each Party specifically agrees that it shall not withhold its consent to the waiver of a privilege or immunity for any purpose except to protect its own legitimate interests.

(e) Upon receipt by any member of the Worthington Steel Group of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or immunity or as to which New Worthington or any of its Subsidiaries has the sole right hereunder to assert a privilege or immunity, or if Worthington Steel obtains knowledge that any of its, or any member of the Worthington Steel Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such Privileged Information, Worthington Steel shall promptly provide written notice to New Worthington of the existence of the request (which notice shall be delivered to New Worthington no later than five (5) Business Days following the receipt of any such subpoena, discovery or other request) and shall provide New Worthington a reasonable opportunity to review the Information and to assert any rights it or they may have, including under this Section 6.8 or otherwise, to prevent the production or disclosure of such Privileged Information.

(f) Upon receipt by any member of the New Worthington Group of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or immunity or as to which Worthington Steel or any member of the Worthington Steel Group has the sole right hereunder to assert a privilege or immunity, or if New Worthington obtains knowledge that any of its, or any member of the New Worthington Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such Privileged Information, New Worthington shall promptly provide written

 

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notice to Worthington Steel of the existence of the request (which notice shall be delivered to Worthington Steel no later than five (5) Business Days following the receipt of any such subpoena, discovery or other request) and shall provide Worthington Steel a reasonable opportunity to review the Information and to assert any rights it or they may have, including under this Section 6.8 or otherwise, to prevent the production or disclosure of such Privileged Information.

(g) Any furnishing of, or access to, Information pursuant to this Agreement and the transfer of the Assets and retention of the Worthington Steel Assets by Worthington Steel are made and done in reliance on the agreement of the Parties set forth in this Section 6.8 and in Section 6.9 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities. The Parties agree that their respective rights to any access to information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of Privileged Information between the Parties and members of their respective Groups pursuant to this Agreement, shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise. The Parties further agree that: (i) the exchange or retention by one Party to the other Party of any Privileged Information that should not have been transferred or retained, as the case may be, pursuant to the terms of this Article VI shall not be deemed to constitute a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise with respect to such Privileged Information; and (ii) the Party receiving or retaining such Privileged Information shall promptly return or transfer, as the case may be, such Privileged Information to the Party who has the right to assert the privilege or immunity.

(h) In furtherance of, and without limitation to, the Parties’ agreement under this Section 6.8, New Worthington and Worthington Steel shall, and shall cause their applicable Subsidiaries to, use reasonable efforts to maintain their respective separate and joint privileges and immunities, including by executing joint defense and/or common interest agreements where necessary or useful for this purpose.

6.9 Confidentiality.

(a) Confidentiality. From and after the Effective Time, subject to Section 6.10 and except as contemplated by or otherwise provided in this Agreement or any Ancillary Agreement, New Worthington, on behalf of itself and each of its Subsidiaries, and Worthington Steel, on behalf of itself and each of its Subsidiaries, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to New Worthington’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential or proprietary Information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective businesses) that is either in its possession (including confidential or proprietary Information in its possession prior to the Effective Time) or furnished by the other Party or the other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement or any Ancillary Agreement, and shall not use any such confidential or proprietary Information other than for such purposes as may be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential or proprietary Information has been: (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement, (ii) later lawfully acquired from other sources by such Party or any of

 

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its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential or proprietary Information or (iii) independently developed or generated without reference to or use of the respective proprietary or confidential Information of the other Party or any of its Subsidiaries. The foregoing restrictions shall not apply in connection with the enforcement of any right or remedy relating to this Agreement or the Ancillary Agreements or the transactions contemplated hereby or thereby. If any confidential or proprietary Information of one Party or any of its Subsidiaries is disclosed to another Party or any of its Subsidiaries in connection with providing services to such first Party or any of its Subsidiaries under this Agreement or any Ancillary Agreement, then such disclosed confidential or proprietary Information shall be used only as required to perform such services.

(b) No Release; Return or Destruction. Each Party agrees not to release or disclose, or permit to be released or disclosed, any confidential or proprietary Information of the other Party addressed in Section 6.9(a) to any other Person, except its Representatives who need to know such Information in their capacities as such (who shall be advised of their obligations hereunder with respect to such Information), and except in compliance with Section 6.10. Without limiting the foregoing, when any Information furnished by the other Party after the Effective Time pursuant to this Agreement or any Ancillary Agreement is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, each Party shall, at its option, promptly after receiving a written notice from the disclosing Party, either return to the disclosing Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the disclosing Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, however, that a Party shall not be required to destroy or return any such Information to the extent that (i) the Party is required to retain the Information in order to comply with any applicable Law, (ii) the Information has been backed up electronically pursuant to the Party’s standard document retention policies and will be managed and ultimately destroyed consistent with such policies or (iii) it is kept in the Party’s legal files for purposes of resolving any dispute that may arise under this Agreement or any Ancillary Agreement.

(c) Third-Party Information; Privacy or Data Protection Laws. Each Party acknowledges that it and its respective Subsidiaries may presently have and, after the Effective Time, may gain access to or possession of confidential or proprietary Information of, or personal Information relating to, Third Parties: (i) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or the other Party’s Subsidiaries, on the other hand, prior to the Effective Time or (ii) that, as between the two parties, was originally collected by the other Party or the other Party’s Subsidiaries and that may be subject to and protected by privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary Information of, or personal Information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among the other Party or the other Party’s Subsidiaries, on the one hand, and such Third Parties, on the other hand.

 

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6.10 Protective Arrangements. In the event that either Party or any of its Subsidiaries is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law or the rules of any stock exchange on which the shares of the Party or any member of its Group are traded to disclose or provide any confidential or proprietary Information of the other Party (other than with respect to any such Information furnished pursuant to the provisions of Section 6.1 or 6.7, as applicable) that is subject to the confidentiality provisions hereof, such Party shall provide the other Party with written notice of such request or demand (to the extent legally permitted) as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s own cost and expense. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such Information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide Information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Authority, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.

6.11 Witness Services. At all times from and after the Effective Time, each of New Worthington and Worthington Steel shall use its commercially reasonable efforts to make available to the other, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees and agents (taking into account the business demands of such individuals) as witnesses to the extent that (i) such Persons may reasonably be required to testify in connection with the prosecution or defense of any Action in which the requesting Party may from time to time be involved (except for claims, demands or Actions in which one or more members of one Group is adverse to one or more members of the other Group) and (ii) there is no conflict in the Action between the requesting Party and the other Party. A Party providing a witness to the other Party under this Section 6.11 shall be entitled to receive from the recipient of such witness services, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as witnesses), as may be reasonably incurred and properly paid under applicable Law.

6.12 Personal Data.

(a) The Parties acknowledge that (i) New Worthington is a “controller” as such term is set forth in the GDPR (a “Data Controller”) with respect to the Processing of the New Worthington Personal Data prior to and after the Effective Time, (ii) Worthington Steel and New Worthington are separate Data Controllers with respect to the Processing of Worthington Steel Personal Data prior to the Effective Time, and (iii) Worthington Steel remains a Data Controller with respect to the Processing of the Worthington Steel Personal Data from and after the Effective Time. As such, from and after the Effective Time, Worthington Steel shall comply with the requirements of Data Protection Laws applicable to Data Controllers in connection with the Worthington Steel Personal Data and this Agreement and shall not knowingly do anything or permit anything to be done which might lead to a breach by New Worthington or its Affiliates of the Data Protection Laws.

 

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(b) Both Parties shall cooperate to ensure that their Processing of Personal Data hereunder does and will comply with all applicable Data Protection Laws and take all reasonable precautions to avoid acts that place the other Party in breach of its obligations under any applicable Data Protection Laws. Nothing in this Section 6.12 shall be deemed to prevent any Party from taking the steps it reasonably deems necessary to comply with any applicable Data Protection Laws.

ARTICLE VII.

FURTHER ASSURANCES AND ADDITIONAL COVENANTS

7.1 Further Assurances.

(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties hereto shall use its commercially reasonable efforts, prior to, on and after the Effective Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable on its part under applicable Laws, regulations and agreements, to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, prior to, on and after the Effective Time, each Party hereto shall cooperate with each other Party hereto, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain or make any Approvals or Notifications of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Third-Party consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by any other Party hereto from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the Worthington Steel Assets and the assignment and assumption of the Worthington Steel Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party shall, at the reasonable request, cost and expense of any other Party, take such other actions as may be reasonably necessary to vest in such other Party all of the transferring Party’s right, title and interest to the Assets allocated to such Party by this Agreement or any Ancillary Agreement, in each case, if and to the extent it is practicable to do so.

(c) On or prior to the Effective Time, New Worthington and Worthington Steel in their respective capacities as direct and indirect shareholders of their respective Subsidiaries, shall each ratify any actions that are reasonably necessary or desirable to be taken by any Subsidiary of New Worthington or Subsidiary of Worthington Steel, as the case may be, to effectuate the transactions contemplated by this Agreement and the Ancillary Agreements.

 

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7.2 Performance. New Worthington shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the New Worthington Group. Worthington Steel shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the Worthington Steel Group. Each Party (including its permitted successors and assigns) further agrees that it shall (a) give timely notice of the terms, conditions and continuing obligations contained in this Section 7.2 to all of the other members of its Group, and (b) cause all of the other members of its Group not to take, or omit to take, any action which action or omission would violate or cause such Party to violate this Agreement or any Ancillary Agreement or materially impair such Party’s ability to consummate the transactions contemplated hereby or thereby.

7.3 No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities.

(a) Each of the Parties agrees that this Agreement shall not include any noncompetition or other similar restrictive arrangements with respect to the range of business activities that may be conducted, or investments that may be made, by the Groups. Accordingly, each of the Parties acknowledges and agrees that nothing set forth in this Agreement shall be construed to create any explicit or implied restriction or other limitation on the ability of any Group to engage in any business or other activity that overlaps or competes with the business of the other Group. Except as expressly provided herein, or in the Ancillary Agreements, each Group shall have the right to, and shall have no duty to abstain from exercising such right to, (i) engage or invest, directly or indirectly, in the same, similar or related business activities or lines of business as the other Group, (ii) make investments in the same or similar types of investments as the other Group, (iii) do business with any client, customer, vendor or lessor of any of the other Group or (iv) subject to Section 7.6, employ or otherwise engage any officer, director or employee of the other Group.

(b) Except as expressly provided herein, or in the Ancillary Agreements, the Parties hereby acknowledge and agree that if any Person that is a member of a Group, including any officer or director thereof, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for either or both Groups, the other Group shall not have an interest in, or expectation that such opportunity be offered to it or that it be offered an opportunity to participate therein, and any such expectation with respect to such opportunity, is hereby renounced by such Group. Accordingly, except as expressly provided herein, or in the Ancillary Agreements, (i) neither Group will be under any obligation to present, communicate or offer any such opportunity to the other Group and (ii) each Group has the right to hold any such opportunity for its own account, or to direct, recommend, sell, assign or otherwise transfer such opportunity to any Person or Persons other than the other Group, and, to the fullest extent permitted by Law, neither Group shall have or be under any duty to the other Group and shall not be liable to the other Group for any breach or alleged breach thereof or for any derivation of personal economic gain by reason of the fact that such Group or any of its officers or directors pursues or acquires the opportunity for itself, or directs, recommends, sells, assigns or otherwise transfers the opportunity to another Person, or such Group does not present, offer or communicate information regarding the opportunity to the other Group.

 

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(c) For the purposes of this Section 7.3, “corporate opportunities” of a Group shall include business opportunities that such Group is financially able to undertake, that are, by their nature, in a line of business of such Group, are of practical advantage to it and are ones in which any member of the Group has an interest or a reasonable expectancy, and in which, by embracing the opportunities, the self-interest of a Person or any of its officers or directors will be brought into conflict with that of such Group.

7.4 Mail Forwarding. (a) New Worthington agrees that following the Effective Time it shall use its commercially reasonable efforts to forward to Worthington Steel any correspondence relating to the Worthington Steel Business (or a copy thereof to the extent such correspondence relates to both the Worthington Steel Business and the New Worthington Business) that is delivered to New Worthington and (b) Worthington Steel agrees that following the Effective Time it shall use its commercially reasonable efforts to forward to New Worthington any correspondence relating to the New Worthington Business (or a copy thereof to the extent such correspondence relates to both the New Worthington Business and the Worthington Steel Business) that is delivered to Worthington Steel.

7.5 Non-Disparagement. Each of the Parties shall not and shall direct their respective Groups and their respective officers and employees not to make, or cause to be made, any statement or communicate any information (whether oral or written) that disparages the other Group or any of their respective officers, directors or employees.

7.6 Non-Solicitation Covenant. For a period of one (1) year from and after the Effective Time, neither Party shall, and shall ensure that the other members of such Party’s Group shall not, directly or indirectly, solicit or hire any manager-level and above employees of the other Party’s Group without the prior written consent of New Worthington or Worthington Steel, as applicable; provided, however, that this Section 7.6 shall not prohibit any general offers of employment to the public, including through a bona fide search firm, so long as it is not specifically targeted toward employees of the New Worthington Group or Worthington Steel Group, as applicable.

7.7 Order of Precedence.

(a) Notwithstanding anything to the contrary in this Agreement or any Specified Ancillary Agreement, in the case of any conflict between the provisions of this Agreement and any Specified Ancillary Agreement, the provisions of such Specified Ancillary Agreement shall prevail.

(b) The Parties acknowledge and confirm that, notwithstanding anything to the contrary in the Transfer Documents, (i) to the extent that any provision of the Transfer Documents conflicts with this Agreement, this Agreement shall be deemed to control with respect to the subject matter thereof and (ii) the Transfer Documents shall not be deemed in any way to amend, expand, restrict or otherwise modify such parties’ rights and obligations set forth in this Agreement.

7.8 New Worthington Marks.

(a) Except as provided in this Section 7.8 or in the Trademark License Agreement:

 

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(i) Worthington Steel acknowledges and agrees that the New Worthington Marks are owned solely by the New Worthington Group, and that none of the Worthington Steel Group shall have any right, title or interest in and to the New Worthington Marks; and

(ii) following the Separation, the Worthington Steel Group shall not: (A) use any of the New Worthington Marks, the New Worthington-Formative Marks or any Trademarks or domain names confusingly similar to or embodying any of the New Worthington Marks, either alone or in combination with other words or elements; (B) seek to register any New Worthington-Formative Marks, (C) challenge any rights of the New Worthington Group in any New Worthington-Formative Marks or their rights to register the same; (D) challenge the validity or enforceability of any of the New Worthington-Formative Marks; or (E) assist any third party in connection with any of the foregoing.

(b) In furtherance of Worthington Steel’s obligations in Section 7.8(a) above, except as provided in the Trademark License Agreement, as soon as possible following the Separation but not later than one year thereafter, the Worthington Steel Group shall remove and change signage, change and substitute promotional or advertising material in whatever medium, change stationery and packaging and take all such other steps as may be required or appropriate to cease all use of the New Worthington Marks; provided, however, that the Worthington Steel Group shall not be in violation of this Section 7.8(b) by reason of:

(i) the appearance of the New Worthington Marks in or on any tools, dies, equipment, engineering/manufacturing drawings, manuals, work sheets, operating procedures, other written materials or other Worthington Steel Assets that are used for internal purposes only in connection with the Worthington Steel Business; provided that Worthington Steel reasonably endeavors to remove such appearances of the New Worthington Marks in the ordinary course of the operation of the Worthington Steel Business;

(ii) the appearance of the New Worthington Marks in or on any third party’s publications, marketing materials, brochures, instruction sheets, equipment or products that were distributed in the ordinary course of business or pursuant to a Contract prior to the Separation, and that generally are in the public domain, or any other similar uses by any such third party over which none of the Worthington Steel Group have control; or

(iii) the use by the Worthington Steel Group of the New Worthington Marks in a non-trademark manner for purposes of notifying customers or the general public of the Separation.

ARTICLE VIII.

INTELLECTUAL PROPERTY LICENSES

8.1 License to Worthington Steel.

(a) Licensed Intellectual Property. New Worthington, on behalf of itself and the New Worthington Group, hereby grants to the Worthington Steel Group a perpetual, irrevocable, royalty-free, fully paid up, non-transferrable (except as permitted pursuant to Section 8.1(g)), non-exclusive license to use the Licensed Intellectual Property in connection the Worthington Steel Business. The foregoing license includes the right (i) to make, have made, use, sell, offer for sale, and import products and services, and (ii) to publish, display, reproduce, copy, create derivative works of, enhance, and otherwise exploit such Licensed Intellectual Property, in each case, in connection with the operation of the Worthington Steel Business.

 

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(b) Ownership of Improvements. As between the Parties, any derivative works, enhancements or other improvements to the Licensed Intellectual Property made or created by or on behalf of any member of the Worthington Steel Group shall be owned by Worthington Steel or its applicable Affiliate.

(c) Sublicensing. The license to the Worthington Steel Group pursuant to Section 8.1(a) shall be sublicensable solely as and to the extent necessary (i) to service providers of the Worthington Steel Group in connection with the provision of services to the Worthington Steel Group, which services require the use of the Licensed Intellectual Property, but not for the benefit of such service providers, and (ii) to customers of the Worthington Steel Group in connection with their purchase of products and services from the Worthington Steel Group. Worthington Steel shall require such permitted sublicensees in writing to comply with the limited scope of any such sublicense, and with confidentiality obligations consistent with Article VI.

(d) Limitations. All Licensed Intellectual Property is licensed as such Intellectual Property exists as of the Effective Time and subject to any and all licenses that have been granted by New Worthington, its Affiliates or its or their predecessors-in-interest with respect thereto prior to the Effective Time. There is no obligation to provide upgrades, updates, enhancements, improvements, support or maintenance to any of the Licensed Intellectual Property. Without limiting the generality of the foregoing, nothing contained in this Section 8.1 shall be construed as:

(i) requiring the filing of any patent application or application to register any other Intellectual Property, the securing of any patent or Intellectual Property registration, or the maintaining of any patent or Intellectual Property in force;

(ii) an agreement to bring or prosecute actions or suits against third parties for infringement or misappropriation; or

(iii) an obligation to furnish any assistance or any technical support.

(e) Notification of Infringement. Worthington Steel shall promptly notify New Worthington if Worthington Steel or any of its Affiliates becomes aware of any activities of a third party that reasonably appear to be an infringement of any item of Licensed Intellectual Property.

(f) Confidentiality. Worthington Steel shall maintain the confidentiality of trade secrets and other non-public Intellectual Property included in the Licensed Intellectual Property in accordance with Article VI.

 

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(g) Assignment.

(i) Except as set forth in Section 8.1(c) and in this Section 8.1(g)(i), the license granted pursuant to Section 8.1(a) may not, without the prior written consent of New Worthington, be assigned, sublicensed or otherwise transferred in whole or in part by any member of the Worthington Steel Group, by operation of Law or otherwise (which shall be deemed to include a change of control of any member of the Worthington Steel Group), and any attempt to do so shall be null and void; provided, however, that any member of the Worthington Steel Group may, without New Worthington’s consent (A) transfer all or a part of its rights and obligations under this Section 8.1 to its Affiliates for so long as they remain Affiliates of Worthington Steel; (B) transfer all of its rights and obligations under this Section 8.1 to any third party in connection with an acquisition of all or substantially all of the Worthington Steel Business (whether by merger, consolidation, sale of assets, sale or exchange of stock, or otherwise) or (C) transfer all or part of its rights and obligations under this Section 8.1 or sublicense any of the licenses granted hereunder to any third party in connection with an acquisition of any discrete operating business unit or division of the Worthington Steel Business (whether by merger, consolidation, sale of assets, sale or exchange of stock, or otherwise); provided that, in each of the cases (B) – (C), (x) upon such transfer, the license shall only be used in connection with the operation of the business, business unit or division being sold, and (y) the transfer or sublicense is limited solely to the business unit or division being sold; and provided further that, in each of the cases (A) – (C), such transferee, sublicensee, assignee or successor agrees to be bound by this Section 8.1.

(ii) For the avoidance of doubt, New Worthington and its Affiliates shall be free to transfer the Licensed Intellectual Property without any consent or sell, transfer, assign, dispose of in any way, license, sublicense and grant any kind of rights with respect to any Licensed Intellectual Property to any Person and impose any kind of restrictions to any Person relating to or in connection with any Licensed Intellectual Property; provided, however, in each case, that the license and rights granted to the Worthington Steel Group under and pursuant to this Agreement remain in full force and effect and continue to inure to the benefit of the Worthington Steel Group without any restriction or alteration.

8.2 License to Worthington.

(a) Worthington Steel Intellectual Property. Worthington Steel acknowledges that the Worthington Steel Intellectual Property is transferred to Worthington Steel subject to, and the New Worthington Group is hereby granted, a perpetual, irrevocable, royalty-free, fully paid up, non-transferrable (except as permitted pursuant to Section 8.2(g)), non-exclusive license to use, in connection with any business conducted by the New Worthington Group, the Worthington Steel Intellectual Property (other than Trademarks) used or held for use as of the Effective Time in connection with the New Worthington Business. The foregoing license includes the right (i) to make, have made, use, sell, offer for sale, and import products and services, and (ii) to publish, display, reproduce, copy, create derivative works of, enhance, and otherwise exploit such Worthington Steel Intellectual Property, in each case, in the operation of the New Worthington Business.

(b) Ownership of Improvements. As between the Parties, any derivative works, enhancements or other improvements to the Worthington Steel Intellectual Property made or created by or on behalf of any member of the New Worthington Group shall be owned by New Worthington or its applicable Affiliate.

 

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(c) Sublicensing. The license to the New Worthington Group pursuant to Section 8.2(a) shall be sublicensable solely as and to the extent necessary (i) to service providers of the New Worthington Group in connection with the provision of services to the New Worthington Group, which services require the use of the Worthington Steel Intellectual Property, but not for the benefit of such service providers, and (ii) to customers of the New Worthington Group in connection with their purchase of products and services from the New Worthington Group. New Worthington shall require such permitted sublicensees in writing to comply with the limited scope of any such sublicense, and with confidentiality obligations consistent with Article VI.

(d) Limitations. All Worthington Steel Intellectual Property is licensed as such Intellectual Property exists as of the Effective Time and subject to any and all licenses that have been granted by New Worthington, its Affiliates or its or their predecessors-in-interest with respect thereto prior to the Effective Time. There is no obligation to provide upgrades, updates, enhancements, improvements, support or maintenance to any of the Worthington Steel Intellectual Property. Without limiting the generality of the foregoing, nothing contained in this Section 8.2 shall be construed as:

(i) requiring the filing of any patent application or application to register any other Intellectual Property, the securing of any patent or Intellectual Property registration, or the maintaining of any patent or Intellectual Property in force;

(ii) an agreement to bring or prosecute actions or suits against third parties for infringement or misappropriation; or

(iii) an obligation to furnish any assistance or any technical support.

(e) Notification of Infringement. New Worthington shall promptly notify Worthington Steel if New Worthington or any of its Affiliates becomes aware of any activities of a third party that reasonably appear to be an infringement of any item of Worthington Steel Intellectual Property.

(f) Confidentiality. New Worthington shall maintain the confidentiality of trade secrets and other non-public Intellectual Property included in the Worthington Steel Intellectual Property in accordance with Article VI.

(g) Assignment.

(i) Except as set forth in Section 8.2(c) and in this Section 8.2(g)(i), the license granted pursuant to Section 8.2(a) may not, without the prior written consent of Worthington Steel, be assigned, sublicensed or otherwise transferred in whole or in part by any member of the New Worthington Group, by operation of Law or otherwise, and any attempt to do so shall be null and void; provided, however, that any member of the New Worthington Group may, without Worthington Steel’s consent, (A) transfer all or a part of its rights and obligations under this Section 8.2 to its Affiliates for so long as they remain Affiliates of New Worthington; (B) transfer all of its rights and obligations under this Section 8.2 to any third party in connection with an acquisition of all or substantially all of the New Worthington Business (whether by merger, consolidation, sale of assets, sale or exchange of stock, or otherwise); and (C) transfer all or part of its rights and obligations under this Section 8.2 or sublicense any of the licenses granted hereunder to any third party in connection with an acquisition of any discrete operating business unit or division of the New Worthington Business (whether by merger, consolidation, sale of

 

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assets, sale or exchange of stock, or otherwise); provided that, in each of the cases (B) – (C), (x) upon such transfer, the license is used only in connection with the operation of the business, business unit or division being sold; and (y) the transfer is limited solely to such business unit or division; and provided, further, that, in each of the cases in (A) – (C), such transferee, sublicensee, assignee or successor agrees to be bound by this Section 8.2.

(ii) For the avoidance of doubt, Worthington Steel and its Affiliates shall be free to transfer the Worthington Steel Intellectual Property without any consent or sell, transfer, assign, dispose of in any way, license, sublicense and grant any kind of rights with respect to any Worthington Steel Intellectual Property to any Person and impose any kind of restrictions to any Person relating to or in connection with any Worthington Steel Intellectual Property; provided, however, in each case, that the license and rights granted to the New Worthington Group under and pursuant to this Agreement remain in full force and effect and continue to inure to the benefit of the New Worthington Group without any restriction or alteration.

ARTICLE IX.

TERMINATION

9.1 Termination. This Agreement and any Ancillary Agreement may be terminated and the terms and conditions of the Separation and the Distribution may be amended, modified or abandoned at any time prior to the Effective Time by and in the sole and absolute discretion of the New Worthington Board without the approval of any other Person, including Worthington Steel or New Worthington or the shareholders of Worthington Steel or New Worthington. In the event that this Agreement is terminated, this Agreement shall become null and void and no Party, nor any Party’s directors, officers or employees, shall have any Liability of any kind to any Person by reason of this Agreement. After the Distribution, this Agreement may not be terminated except by an agreement in writing signed by New Worthington and Worthington Steel.

9.2 Effect of Termination. In the event of any termination of this Agreement prior to the Effective Time, no Party (nor any of its directors, officers or employees) shall have any Liability or further obligation to the other Party by reason of this Agreement.

ARTICLE X.

MISCELLANEOUS

10.1 Counterparts; Entire Agreement; Corporate Power.

(a) This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to each other Party. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile, electronic mail (including.pdf, DocuSign or other electronic signature) or other transmission method shall be deemed to have been duly and validly delivered and shall be sufficient to bind the parties to the terms and conditions of this Agreement.

 

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(b) This Agreement, the Ancillary Agreements and the exhibits, annexes and schedules hereto and thereto, contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c) New Worthington represents on behalf of itself and each other member of the New Worthington Group, and Worthington Steel represents on behalf of itself and each other member of the Worthington Steel Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby; and

(ii) this Agreement and each Ancillary Agreement to which it is a party has been or will be duly executed and delivered by it and constitutes or will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof.

10.2 Governing Law. This Agreement (and any claims or Disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Ohio, irrespective of the choice of laws principles of the State of Ohio, including all matters of validity, construction, effect, enforceability, performance and remedies.

10.3 Assignability. Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the other Party or the other parties hereto and thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party or party thereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party or other parties thereto, as applicable. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement or the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party. Nothing herein is intended to, or shall be construed to, prohibit either Party or any member of its Group from being party to or undertaking a change of control.

10.4 Third-Party Beneficiaries. Except for the release and indemnification rights under this Agreement of any New Worthington Indemnitee or Worthington Steel Indemnitee in their respective capacities as such, and the provisions of Section 5.1(d) as to directors and officers of New Worthington Group and Worthington Steel Group: (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including, without limitation, any shareholders of New Worthington or shareholders of Worthington Steel) except the Parties hereto any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement or any Ancillary Agreement and neither

 

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this Agreement nor any Ancillary Agreement shall provide any third Person (including, without limitation, any shareholders of New Worthington or shareholders of Worthington Steel) with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

10.5 Notices. All notices, requests, claims, demands or other communications under this Agreement and, to the extent applicable, and unless otherwise provided thereunder, under each of the Ancillary Agreements shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email with receipt confirmed, or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.5):

If to New Worthington, to:

Worthington Industries, Inc.

200 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Patrick Kennedy, General Counsel

Email: patrick.kennedy@worthingtonindustries.com

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

330 North Wabash Avenue, Suite 2800

Chicago, IL 60611

Attention: Cathy Birkeland; Christopher Drewry

Email: cathy.birkeland@lw.com; christopher.drewry@lw.com

If to Worthington Steel, to:

Worthington Steel, Inc.

100 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Michaune Tillman, General Counsel

Email: michaune.tillman@worthingtonindustries.com

Any Party may, by notice to the other Party, change the address and contact person to which any such notices are to be given.

10.6 Severability. If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

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10.7 Force Majeure. No Party shall be deemed in default of this Agreement or, unless otherwise provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation, other than a delay or failure to make a payment, so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.

10.8 Press Release.

(a) No later than one (1) Business Day after the Effective Time, Worthington Steel and New Worthington shall issue a joint press release regarding the consummation of the Separation and Distribution.

(b) Worthington Steel shall not issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby or make any other public disclosure regarding the terms of this Agreement or the transactions contemplated hereby, or the discussions relating hereto, without obtaining the prior written approval of New Worthington.

10.9 Expenses. The expenses and costs incurred in connection with the Transactions shall be borne 100% by New Worthington.

10.10 Late Payments. Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus one and one-half percent (1.5%) or the maximum rate permitted by Law, whichever is less.

10.11 Headings. The article, section and paragraph headings contained in this Agreement or any Ancillary Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

10.12 Survival of Covenants. Except as expressly set forth in this Agreement or any Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and the Ancillary Agreements, and liability for the breach of any obligations contained herein or therein, shall survive the Separation and the Distribution and shall remain in full force and effect in accordance with their terms.

 

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10.13 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement or any Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement or any Ancillary Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

10.14 Specific Performance. Subject to Article IV, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its or their rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

10.15 Amendments. No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced; provided, at any time prior to the Effective Time, the terms and conditions of this Agreement, including terms relating to the Separation and the Distribution, may be amended, modified or abandoned by and in the sole and absolute discretion of the New Worthington Board without the approval of any Person, including Worthington Steel or New Worthington.

10.16 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

10.17 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.

 

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10.18 Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a shareholder, director, employee, officer, agent or representative of New Worthington or Worthington Steel, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of New Worthington or Worthington Steel, as applicable, under this Agreement or any Ancillary Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of New Worthington or Worthington Steel, for itself and its respective Subsidiaries and its and their respective shareholders, directors, employees and officers, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.

10.19 Exclusivity of Tax Matters. Notwithstanding any other provision of this Agreement (other than Sections 2.2, 2.6(c), 2.7, 3.2(c), 3.3(n), 5.5(g) and 5.6(f)), the Tax Matters Agreement shall exclusively govern all matters related to Taxes (including allocations thereof) addressed therein. If there is a conflict between any provision of this Agreement or of an Ancillary Agreement (other than the Tax Matters Agreement), on the one hand, and the Tax Matters Agreement, on the other hand, and such provisions relate to matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall control.

10.20 Limitations of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE CONTRARY, NEITHER WORTHINGTON STEEL NOR ITS AFFILIATES, ON THE ONE HAND, NOR NEW WORTHINGTON NOR ITS AFFILIATES, ON THE OTHER HAND, SHALL BE LIABLE UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE OTHER FOR ANY INCIDENTAL CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO INDEMNIFICATION OF SUCH DAMAGES, INCLUDING ALL COSTS, EXPENSES, INTEREST, ATTORNEYS’ FEES, DISBURSEMENTS AND EXPENSES OF COUNSEL, EXPERT AND CONSULTING FEES AND COSTS RELATED THERETO OR TO THE INVESTIGATION OR DEFENSE THEREOF, PAID BY AN INDEMNITEE IN RESPECT OF A THIRD-PARTY CLAIM).

[Signature Page to Follow.]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.

 

WORTHINGTON INDUSTRIES, INC.
By:   /s/ Joseph B. Hayek
Name:   Joseph B. Hayek
Title:   Vice President

Signature Page to Separation and Distribution Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.

 

WORTHINGTON STEEL, INC.
By:  

/s/ Timothy A. Adams

Name:   Timothy A. Adams

Title:

  Vice President

Signature Page to Separation and Distribution Agreement

Exhibit 3.1

 

LOGO

inn mi mi mi im mi in hi in in a in in mi DATE DOCUMENT ID DESCRIPTION FILING EXPED CERT COPY 12/01/2023 202333501382 AMENDMENT TO ARTICLES (AMD) 50.00 300,00 0.00 0.00 Receipt This is not a bill. Please do not remit payment. VORYS. SATER. SEYMOUR AND PEASE LLP ATTN: MICHELLE GOODWIN. CORPORATE PARALEGAL 52 EAST GAY STREET COLUMBUS. OH 43215 STATE OF OHIO CERTIFICATE Ohio Secretary of State, Frank LaRose 1037038 It is hereby certified that the Secretary of State of Ohio has custody of the business records for WORTHINGTON ENTERPRISES, INC. and, that said business records show the filing and recording of: Document(s) Document No(s): AMENDMENT TO ARTICLES 202333501382 Effective Date: 12/01/2023 Witness my hand and the seal of the Secretary State at Columbus, Ohio this 1st day of December, A.D. 2023. United States of America State of Ohio Office of the Secretary of State Ohio Secretary of State


LOGO

Form 540 Prescribed by: Mail this form to one of the following: —Toll Free: 877.767.3453 Regular Filing (non expedite)    â– Central Ohio: 614.466.3910 P.O.Box 1323 Frank laRose Ohiosos.gov columbus 432,6 wr~ Expedite Filing (Two business day processing time, OfaSantonfciState. business@ohiosos.gov J File online or for more information: OhioBusinessCentral.gov Columbus, oh 43216 For screen readers, follow instructions located at this path.     . Certificate of Amendment received (For-Profit, Domestic Corporation) Filing Fee: $50 Dec Cl 2023 Form Must Be Typed SECRETARY OF STATE Check appropriate box: â–¡Amendment to existing Articles of Incorporation (125-AMDS) â–¡Amended and Restated Articles (122-AMAP)—The following articles supersede the existing articles and all amendments thereto. Complete the following information: Worthington Industries, Inc. Name of Corporation Charter Number 1037038 Check one box below and provide information as required: The articles are hereby amended by the Incorporators. Pursuant to Ohio Revised Code section 1701.70 |—| (A), incorporators may adopt an amendment to the articles by a writing signed by them if initial directors are not named in the articles or elected and before subscriptions to shares have been received. . The articles are hereby amended by the Directors. Pursuant to Ohio Revised Code section 1701.70(A), directors may adopt amendments if initial directors were named in articles or elected, but subscriptions to shares have not been received. Also, Ohio Revised Code section 1701.70(B) sets forth additional cases in which directors may adopt an amendment to the articles. The resolution was adopted pursuant to Ohio Revised Code section 1701.70(B) 1701 .70(B)(6) (In this space insert the number 1 through 10 to provide basis for adoption.) ——— «l â–¡ The articles are hereby amended by the Shareholders pursuant to Ohio Revised Code section 1701.71. â–¡ The articles are hereby amended and restated pursuant to Ohio Revised Code section 1701.72. Form 540 Page2of4 Last Revised: 06/2019


LOGO

A copy of the resolution of amendment is attached to this document. Note: If amended articles were adopted, they must set forth all provisions required in original articles except that articles amended by directors or shareholders need not contain any statement with respect to initial stated capital. See Ohio Revised Code section 1701.04 for required provisions. By signing and submitting this form to the Ohio Secretary of State, the undersigned hereby certifies that he or she has the requisite authority to execute this document. Must be signed by all Signature . incorporators, if amended by    . ..—’ incorporators, or an authorized officer if amended by directors or â– ; â– — shareholders, pursuant to Ohio By (if applicable) Revised Code section 1701.73(B) and (C)- Patrick J. Kennedy If authorized representative Print Name is an individual, then they must sign in the “signature” box and print their name ...    in the “Print Name” box. Signature If authorized representative is a business entity, not an — — — : ——— individual, then please print    J the business name in the By (if applicable) “signature box, an authorized representative    : — of the business entity must sign in the “By” box and print their name in the Print Name “Print Name” box. Form 540 Page3of4 Last Revised: 06/2019


LOGO

ATTACHMENT TO CERTIFICATE OF AMENDMENT OF WORTHINGTON INDUSTRIES, INC. The following resolutions were authorized and approved at a Meeting by the Board of Directors of Worthington Industries, Inc., an Ohio corporation (“Corporation): RESOLVED, that Article FIRST of the Amended Articles of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows: FIRST: The. name of the Corporation shall be Worthington Enterprises, Inc.

Exhibit 10.1

TRANSITION SERVICES AGREEMENT

BY AND BETWEEN

WORTHINGTON INDUSTRIES, INC.

AND

WORTHINGTON STEEL, INC.

DATED AS OF NOVEMBER 30, 2023


TABLE OF CONTENTS

 

     Page  

ARTICLE I. DEFINITIONS

     1  

1.1

  Definitions      1  

1.2

  Interpretation      2  

ARTICLE II. SERVICES

     2  

2.1

  Services      2  

2.2

  Standard of the Provision of Services      3  

2.3

  Omitted Services      3  

2.4

  Service Modifications      3  

2.5

  Maintenance      4  

2.6

  Subcontractors      4  

2.7

  Required Consents      4  

2.8

  Cutover      5  

ARTICLE III. COOPERATION AND ACCESS

     5  

3.1

  General Cooperation      5  

3.2

  Access to Premises, Systems and Information      5  

3.3

  Compliance with Third Party Vendor Agreements      6  

3.4

  Project Managers      6  

ARTICLE IV. FEES AND PAYMENT

     6  

4.1

  Fees and Expenses      6  

4.2

  Taxes      7  

4.3

  Limited Set-Off Rights      7  

4.4

  Currency      7  

ARTICLE V. TERM; TERMINATION

     7  

5.1

  Term      7  

5.2

  Early Termination      8  

5.3

  Termination for Default      8  

5.4

  Effect of Termination; Survival      8  

ARTICLE VI. FORCE MAJEURE

     8  

6.1

  Force Majeure      8  

ARTICLE VII. CONFIDENTIALITY

     9  

7.1

  Confidentiality; Data Privacy      9  

 

i


7.2

  Protective Arrangements      11  

ARTICLE VIII. DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY

     12  

8.1

  Disclaimer of Warranties      12  

8.2

  Limitation of Liability      12  

8.3

  Limitation of Damages      12  

ARTICLE IX. MISCELLANEOUS

     13  

9.1

  Counterparts; Entire Agreement; Corporate Power      13  

9.2

  Governing Law      13  

9.3

  Assignability      13  

9.4

  Third-Party Beneficiaries      14  

9.5

  Notices      14  

9.6

  Severability      14  

9.7

  Force Majeure      15  

9.8

  Headings      15  

9.9

  Waivers of Default      15  

9.10

  Dispute Resolution      15  

9.11

  Amendments      15  

9.12

  Construction      15  

9.13

  Performance      16  

9.14

  Limited Liability      16  

9.15

  Personnel      16  

9.16

  Exclusivity of Tax Matters      16  

Schedules

 

Schedule A    Worthington Provided Services
Schedule B    Worthington Steel Provided Services
Schedule C    Excluded Services

 

ii


TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into effective as of November 30, 2023 (the “Effective Date”), by and between Worthington Industries, Inc., an Ohio corporation (“New Worthington”), and Worthington Steel, Inc., an Ohio corporation (“Worthington Steel”). New Worthington and Worthington Steel are each a “Party” and are sometimes referred to herein collectively as the “Parties”.

RECITALS

WHEREAS, New Worthington and Worthington Steel entered into that certain Separation and Distribution Agreement as of November 30, 2023 (as amended, restated, amended and restated, and otherwise modified from time to time, the “Separation Agreement”);

WHEREAS, it is anticipated that, immediately following the Distribution, the Worthington Steel Group will separate from the New Worthington Group and Worthington Steel will be established as a separate, publicly traded company to operate the Worthington Steel Business; and

WHEREAS, pursuant to the Separation Agreement, services are to be provided on a transitional basis by New Worthington to the Worthington Steel Group and by Worthington Steel to the New Worthington Group after the Distribution Date upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants and agreements contained in this Agreement and in the Separation Agreement, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. Capitalized terms shall have the meanings set forth below in this Section 1.1 or elsewhere in this Agreement. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Separation Agreement.

Excluded Services” means the services listed on Schedule C.

Force Majeure” means, with respect to a Party, an event beyond the reasonable control of such Party, including acts of God, storms, floods, pandemics, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure or interruption of networks or energy sources.

Group” means the New Worthington Group or the Worthington Steel Group, as applicable.

New Worthington Group” means New Worthington and its Subsidiaries and any of New Worthington’s consolidated or unconsolidated joint ventures.

 

1


Provider” means the Party providing (or causing to provide) a Service under this Agreement.

Recipient” means the Party (together with any applicable Subsidiaries) receiving a Service under this Agreement.

Services” means the Worthington Provided Services or the Worthington Steel Provided Services, as applicable.

Stranded Costs” means any direct costs and expenses resulting from pre-existing obligations to third parties, to the extent that such costs or expenses are not otherwise recoverable from Recipient due to early termination of a Service, and to the extent such costs or expenses (a) relate to the period between the effective date of an early termination of a Service and the date on which such Service had originally been scheduled to terminate, including all pre-existing payment obligations that relate to such period that cannot be terminated, and/or (b) relate to any penalties, fees or other costs or expenses paid to third parties which would not have been incurred but for the early termination or partial termination of such contract or obligation.

Worthington Steel Group” means Worthington Steel and its Subsidiaries and any of Worthington Steel’s consolidated or unconsolidated joint ventures.

1.2 Interpretation. In this Agreement (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” “herewith” and words of similar import, and the term “Agreement” or any other reference to an agreement shall, unless otherwise stated, be construed to refer to this Agreement (including all of the Schedules hereto and thereto) and not to any particular provision of this Agreement; (c) Article, Section, and Schedule references are to the Articles, Sections, and Schedules to this Agreement unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation”; (e) the word “or” shall not be exclusive; (f) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” and words of similar import shall all be references to the Effective Date, regardless of any amendment or restatement hereof; and (g) unless otherwise provided, all references to “$” or “dollars” are to United States dollars.

ARTICLE II.

SERVICES

2.1 Services. Subject to the terms and conditions of this Agreement, New Worthington shall provide (or cause to be provided) to the Worthington Steel Group all of the services listed in Schedule A attached hereto (the “Worthington Provided Services”). Subject to the terms and conditions of this Agreement, Worthington Steel shall provide (or cause to be provided) to the New Worthington Group all of the services listed in Schedule B attached hereto (the “Worthington Steel Provided Services”). Notwithstanding the foregoing, Provider shall not be obligated to provide any Service to the extent the provision of such Service would violate any applicable Law.

 

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2.2 Standard of the Provision of Services. Provider shall provide, or cause to be provided, the Services it is required to provide hereunder in the manner and at a level substantially consistent with that provided by Provider in the twelve (12) month period preceding the Effective Date (the “Service Standard”). All of the Worthington Provided Services shall be for the sole benefit of Worthington Steel Group, and all of the Worthington Steel Provided Services shall be for the sole benefit of the New Worthington Group.

2.3 Omitted Services. In the event that Recipient identifies any service that was provided by Provider to Recipient prior to the Closing but was unintentionally omitted from Schedule A or Schedule B, as applicable, that is reasonably required for the conduct of Recipient’s business after the Distribution in substantially the same manner as conducted in the twelve (12) month period preceding the Effective Date and that it wishes to have provided by Provider hereunder (each, an “Omitted Service”), it shall provide notice to Provider’s Project Manager, and the Project Managers will meet in person or by teleconference or video conference no later than five (5) Business Days after delivery of the notice to confirm the scope of such Omitted Service, the term for which such Omitted Services will be provided and the applicable fees. The Parties shall then promptly, and in no event later than five (5) Business Days after the relevant meeting specified in the preceding sentence, amend Schedule A or Schedule B, as applicable, in accordance with Section 9.11 to include a description of the Omitted Service, the term for which such Omitted Service will be provided, and the applicable Fees. Such Omitted Service will thereafter be considered a Service hereunder. Notwithstanding the foregoing, and notwithstanding anything to the contrary in this Agreement, in no event shall Provider be required to provide any Excluded Services.

2.4 Service Modifications.

(a) Changes. During the Term, the Parties may, in accordance with the procedures specified in this Section 2.4 agree to modify the manner in which a Service is provided or the terms and conditions relating to the performance of a Service in order to reflect, among other things, new procedures or processes for providing such Service (a “Service Modification”).

(b) Change Requests. In the event either of the Parties desires a Service Modification, the Party requesting the Service Modification will deliver a written description of the proposed Service Modification (a “Change Request”) to the other Party as follows: (i) in the case of a Change Request by Provider, to Recipient’s Project Manager; and (ii) in the case of a Change Request by Recipient, to Provider’s Project Manager.

(c) Meeting of the Parties. Unless the Party receiving the Change Request agrees to implement the Change Request as proposed, the Project Managers will meet in person or by teleconference or video conference to discuss the Change Request no later than five (5) Business Days after delivery of the Change Request to the other Party.

(d) Approval of Recipient Change Requests. All Recipient Change Requests must be approved by Provider’s Project Manager in writing before the Service Modification may be implemented in accordance with Section 2.4(f) below, such approval not to be unreasonably withheld, conditioned or delayed. For the purposes of the preceding sentence, the Parties agree that it is not unreasonable to: (a) withhold such consent to the extent that such proposed Service Modification would materially increase the resources required for Provider to provide the Service after giving effect to the Change Request or (b) condition such consent on Recipient agreeing to bear any increases in Provider’s cost of performance resulting from such Service Modification.

 

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(e) Approval of Provider Change Requests. All Provider Change Requests must be approved by Recipient’s Project Manager in writing before the Service Modification may be implemented in accordance with Section 2.4(f) below, such approval not to be unreasonably withheld, conditioned or delayed. For the purposes of the preceding sentence, the Parties agree that it is not unreasonable to: (a) withhold such consent to the extent that such proposed Service Modification would materially degrade Provider’s performance of the Service after giving effect to the Change Request, (b) condition such consent on Provider agreeing not to pass on to Recipient any increases in Provider’s cost of performance resulting from such Service Modification or (c) condition such consent on Provider agreeing to reimburse Recipient for any costs incurred by Recipient to implement or accommodate such Service Modification in order to continue to receive the applicable Service.

(f) Implementation of Approved Service Modification. If a Change Request is approved in accordance with this Section 2.4, Schedule A or Schedule B, as applicable, will be amended in accordance with Section 9.10 to reflect the implementation of the Change Request and any other agreed-upon terms or conditions relating to the Service Modification.

2.5 Maintenance. Notwithstanding anything to the contrary in Section 2.2, Provider shall have the right to shut down its facilities and/or systems used in providing the Services in accordance with scheduled maintenance windows that have been set by Provider and communicated in advance to Recipient’s Project Manager. The scheduled maintenance windows shall always be planned to be performed outside of customary business hours, or if not practicable, be planned so that such shutdown shall not materially and adversely affect Recipient’s operations. In the event nonscheduled maintenance is necessary, Provider may perform such maintenance; provided that Provider shall, whenever possible, notify Recipient twenty-four (24) hours in advance. Unless not feasible under the circumstances, this notice shall be given in writing (including by email) to Recipient’s Project Manager. Where written notice is not feasible, Provider shall give prompt oral notice, which notice shall be promptly confirmed in writing (including by email) by Provider. Provider shall be relieved of its obligations to provide Services only for the period of time that its facilities and/or systems are so shut down but shall use commercially reasonable efforts to minimize each period of shutdown for such purpose.

2.6 Subcontractors. Provider may subcontract any of the Services or portion thereof to any other Person, including any Affiliate of Provider; provided, however, that Provider shall in all cases remain primarily responsible for all of its obligations hereunder with respect to the Services, and any processing of Personal Data, provided by its subcontractor(s).

2.7 Required Consents. Provider shall use commercially reasonable efforts to obtain any consents, approvals or amendments to existing agreements of such Provider necessary to allow such Provider to provide the Services to Recipient (the “Required Consents”). The applicable Recipient shall pay, or, at Provider’s request, reimburse Provider for, the cost of obtaining the Required Consents and any fees or charges associated with the Required Consents including, but not limited to, any additional license, sublicense, access or transfer fees, approved by Recipient in

 

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advance. If Recipient does not approve any such fees or charges and as a result a Required Consent is not obtained, the Provider shall be relieved of its obligation to provide the applicable Service(s). Recipient acknowledges that there can be no assurance that Provider will be able to obtain the Required Consents. In the event that any Required Consents are not obtained, upon Recipient’s request, Provider will reasonably cooperate with Recipient to identify, and if commercially feasible, to implement, a work-around or alternative arrangement for any affected Service(s); provided, that (i) Recipient shall be responsible for all fees and costs associated with any work-around or alternative arrangement, and (ii) Recipient acknowledges that any such work-around or alternative arrangement may adversely impact the performance of the applicable Service, and Provider shall not be liable for any breach of the Service Standard that results from the adoption of any such work-around or alternative arrangement. If no commercially feasible alternative for a Service is available or capable of being reasonably implemented, Provider shall be relieved of its obligations to provide such Service.

2.8 Cutover. Recipient shall be responsible for planning and preparing the transition to its own internal organization or other third-party service providers for the provision of each of the Services provided to it hereunder (the “Cutover”). At Recipient’s request, Provider shall meet with Recipient within fourteen (14) calendar days following such request to assist Recipient with the initial development of a plan for Cutover (the “Cutover Plan”) and shall provide Recipient with all information reasonably requested by it in connection with the development and implementation of the Cutover Plan. Recipient shall, with Provider’s reasonable assistance, prepare a Cutover Plan with sufficient lead time in order to achieve a timely Cutover. The Cutover Plan of each Party shall provide for a completion date with respect to each Service that is no longer than the end of the applicable Service Term. Once the Cutover Plan is prepared, Recipient shall promptly provide Provider a copy of the Cutover Plan. Provided that Recipient is not in default of its payment obligations hereunder, Provider shall reasonably cooperate and shall use commercially reasonable efforts to cause its third-party vendors to reasonably cooperate, at Recipient’s expense, in a timely implementation of the Cutover Plan.

ARTICLE III.

COOPERATION AND ACCESS

3.1 General Cooperation. Subject to the terms and conditions set forth in this Agreement, the Parties shall each use commercially reasonable efforts to make available, as reasonably requested by the other Party, sufficient resources and timely decisions in order that each Party may accomplish its obligations under this Agreement in a timely and efficient manner.

3.2 Access to Premises, Systems and Information. Each Party agrees that it shall, without charge, provide such reasonable access to its premises, personnel, computer systems and information (excluding “Protected Health Information,” as defined under the Health Insurance Portability and Accountability Act and its implementing regulations, as amended (collectively, “HIPAA”)), and such reasonable assistance, to the other Party as is reasonably required for such other Party to perform its obligations or receive the Services under this Agreement. Unless otherwise agreed to in writing by the Parties, each Party will: (a) use the premises, computer systems and information of the other Party solely for the purpose of providing or receiving the Services; (b) limit such access to those of its representatives with a bona fide need to have such access in connection with the Services; (c) comply, and cause its employees, subcontractors and

 

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third-party providers to comply, with all policies and procedures governing access to and use of such premises, computer systems and/or information made known to such Party, and (d) comply with the provisions set forth in Article VII with respect to Confidential Information of the Disclosing Party obtained by the Receiving Party. The Parties shall cooperate in the investigation of any apparent unauthorized access to any premises, computer systems and/or information of any Party. These provisions concerning access to premises, personnel, computer systems and information shall apply equally to any access and use by a Party of the other Party’s electronic mail system, electronic switched network, either directly or via a direct inward service access or calling card feature, data network or any other property, equipment or service of the other Party, and any software that may be accessible by either Party in connection with this Agreement.

3.3 Compliance with Third Party Vendor Agreements. Recipient shall comply with all applicable terms of third-party vendor agreements used by Provider in providing the Services, to the extent that Recipient has been notified of such terms.

3.4 Project Managers. Each Party will appoint a project manager, who shall be responsible for all day-to-day matters arising hereunder, and who shall be the primary contact for the other Party for any issues arising hereunder (each a “Project Manager”). The Project Managers shall meet (in person or by teleconference or video conference) at the request of either Project Manager, in order to ensure the provision of the Services in accordance with the terms hereof, as well as the orderly transition of those Services at the end of the applicable Service Term. New Worthington’s initial Project Manager shall be Colin Souza and Worthington Steel’s initial Project Manager shall be Colleen Philabaum; each Party may change its designated Project Manager upon notice to the other Party’s Project Manager. Each Party agrees that its Project Manager shall have full and complete authority on behalf of their respective Party to bind such Party in connection with this Agreement and the Services.

ARTICLE IV.

FEES AND PAYMENT

4.1 Fees and Expenses.

(a) Recipient shall pay to Provider the fees for the Services provided to it hereunder, as set forth in Schedule A or Schedule B, as applicable (the “Fees”). In addition, without duplication of any expenses included in the Fees, Recipient shall reimburse Provider for all reasonable and actual out-of-pocket fees, costs, and expenses incurred by Provider in the provision of the Services (“Expenses”); provided that any Expenses greater than $25,000 shall require Recipient’s written approval prior to incurrence to be reimbursable.

(b) Promptly following the end of each calendar month during the Term, Provider shall deliver to Recipient an invoice setting forth the Fees for the Services provided to Recipient during such month and any Expenses incurred during such month. Recipient shall pay, or cause to be paid within thirty (30) days following its receipt of such invoice, the amount of such invoice by electronic funds transfer of immediately available funds to the bank account specified by Provider. If Recipient fails to pay any undisputed amounts due hereunder by the applicable due date, Recipient shall be obligated to pay to Provider, in addition to the amount due, interest on such amount at a rate per annum equal to the Prime Rate plus one and one-half percent (1.5%) or the maximum rate permitted by Law, whichever is less, calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

 

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4.2 Taxes. All sums payable under this Agreement are exclusive of value added, sales, goods and services, turnover or other similar Taxes (excluding, for the avoidance of doubt, Taxes imposed on or measured by net income or net worth) that may be levied in any jurisdiction with respect to any Services (“Sales Taxes”). Any Sales Taxes required to be charged and collected by Provider under applicable Law are in addition to amounts to be paid by Recipient under Section 4.1. If any Taxes are required to be deducted or withheld under applicable Law from any payments made by one Party (the “Payor”) to another Party (the “Payee”) hereunder (“Payment Withholding Taxes”), then such Payor shall (a) withhold or deduct the amount of Payment Withholding Taxes required under applicable Law and promptly pay such Payment Withholding Taxes to the applicable Tax authority, and (b) pay additional amounts to such Payee so that the net amount actually received by such Payee after such withholding or deduction of Tax (including any withholding or deduction applicable to additional amounts payable under this clause (b)) is equal to the amount that such Payee would have received had no Payment Withholding Taxes been deducted or withheld. If the Payee receives a cash refund of (or credit in lieu of such refund with respect to) Payment Withholding Taxes, then the Payee shall reimburse the Payor for an amount equal to such refund or credit (net of any Taxes thereon and any reasonable costs and expenses incurred in obtaining such refund or credit). The Payor and the Payee shall make commercially reasonable efforts to obtain any exemption relating to, or reduced rate of, deduction or withholding for or on account of Tax, including making applicable double taxation treaty clearance applications, and each Party shall cooperate with the other with respect thereto.

4.3 Limited Set-Off Rights. Recipient shall pay the full amount of Fees and Expenses due under Section 4.1 and shall not set off, counterclaim or otherwise withhold any amount owed to Provider under this Agreement, on account of any obligation owed by Provider to Recipient under this Agreement that has not been finally adjudicated, settled, or otherwise agreed upon by the Parties in writing; provided, however, that either Party shall be permitted to assert a set-off right with respect to any obligation that has been so finally adjudicated, settled or otherwise agreed upon by the Parties in writing against amounts owed by the other Party under this Agreement.

4.4 Currency. All payments to be made under this Agreement shall be made in U.S. Dollars.

ARTICLE V.

TERM; TERMINATION

5.1 Term. Each Service shall be provided during the term specified for such Service in Schedule A or Schedule B, as applicable (each, a “Service Term”), which may be extended by Recipient upon the Parties’ mutual written agreement of the applicable terms. The term of this Agreement shall commence on the Effective Date and shall expire upon the termination or expiration of all of the Services (the “Term”).

 

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5.2 Early Termination. Recipient may terminate this Agreement in respect of any or all of the Services provided to Recipient by Provider, by providing a minimum of forty-five (45) days (or such other period as may be set forth on Schedule A or Schedule B, as applicable, with respect to a particular Service) prior written notice to Provider; provided, however, that Recipient may not terminate a particular Service if such Service is interdependent with other Services, unless all such interdependent Services are simultaneously terminated. Recipient shall reimburse Provider for all Stranded Costs incurred by Provider as a result of early termination of a Service, which shall be invoiced and payable in the same manner as set forth in Section 4.1.

5.3 Termination for Default.

(a) Termination by Provider. Provider may terminate the Services it provides to Recipient hereunder in the event that Recipient fails to pay amounts due in accordance with Article IV, and Recipient fails to cure such payment default within thirty (30) days following receipt of written notice of the payment default from Provider.

(b) Termination by Recipient. Recipient may terminate this Agreement with respect to the Services it receives from Provider, in whole but not in part, in the event that Provider is in material breach of its obligations relating to the provision of the Services to Recipient, and Provider fails to cure such material breach within fifteen (15) days following its receipt of written notice of such material breach from Recipient.

5.4 Effect of Termination; Survival.

(a) Upon termination or expiration of any Service pursuant to this Agreement, Provider shall have no further obligation to provide the terminated Service, and Recipient shall have no obligation to pay any Fees or Expenses relating to any such Service beyond the effective date of termination (other than Stranded Costs, as and to the extent applicable); provided that Recipient shall remain obligated to the other Party for the Fees and Expenses owed and payable in respect of Services provided through the effective date of termination. In connection with termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination.

(b) Upon termination or expiration of this Agreement, this Section 5.4, Article VII, Article VIII, and Article IX shall survive. The remaining provisions hereof shall survive to the extent such provisions are applicable to any amounts due for the Services provided prior to termination or expiration.

ARTICLE VI.

FORCE MAJEURE.

6.1 Force Majeure. Neither Party shall have any Liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure; provided that such Party shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other Party stating the date and

 

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extent of such suspension and the cause thereof, and such suspending Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of the cause, and if Provider is the Party so prevented then Recipient shall not be obligated to pay the Fee for a Service to the extent and for so long as such Service is not made available to Recipient hereunder as a result of such Force Majeure. During the period of a Force Majeure, Recipient may terminate the suspended Services (and shall be relieved of the obligation to pay Fees following such permanent termination) if such Services are suspended due to a Force Majeure for more than fifteen (15) consecutive days.

ARTICLE VII.

CONFIDENTIALITY

7.1 Confidentiality; Data Privacy.

(a) Confidentiality. Subject to Section 7.2 and except as otherwise expressly provided in this Agreement, each Party, on behalf of itself and each of its Affiliates (collectively, the “Receiving Party”), agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to the Receiving Party’s own non-public information pursuant to policies in effect as of the Effective Date but in no event with less than a reasonable standard of care, all non-public Information concerning the other Party (or its business) or the other Party’s Affiliates (or their respective businesses) (collectively, the “Disclosing Party”) that is in the Receiving Party’s possession in connection with the performance of this Agreement (the “Confidential Information”), and shall not use any non-public Information concerning the Disclosing Party other than as necessary to perform or receive the Services hereunder, as applicable. Notwithstanding the foregoing, Confidential Information shall not include information of the Disclosing Party to the extent it is: (i) in the public domain or generally available to the public on the Effective Date, or thereafter becomes available to the public, other than as a result of a disclosure by the Receiving Party or its Representatives in violation of this Agreement, (ii) lawfully acquired from other sources by the Receiving Party, which sources are not known to the Receiving Party to be bound by a confidentiality obligation with respect to the Disclosing Party’s Confidential Information, or (iii) independently developed or generated by the Receiving Party or its Representatives without reference to or use of the Confidential Information of the Disclosing Party. The foregoing restrictions shall not prohibit the disclosure of non-public Information as required or requested by a Governmental Authority or required pursuant to Law or the rules of any stock exchange on which shares of the Receiving Party or any member of its Group are traded (subject to Section 7.2), or as required to exercise any right or enforce any remedy under this Agreement or the Separation Agreement. For the avoidance of doubt, “Confidential Information” also shall not include “Protected Health Information” as defined under HIPAA, and any unintended acquisition, access, use, or disclosure of Protected Health Information pursuant to this Agreement or otherwise shall be addressed in accordance with HIPAA.

(b) No Release; Return or Destruction. Each Party, in its capacity as the Receiving Party, agrees not to release or disclose, or permit to be released or disclosed, any Confidential Information of the Disclosing Party addressed in Section 7.1(a) to any other Person, except the Receiving Party’s Representatives who need to know such Information in their capacities as such (who shall be advised of their obligations hereunder with respect to such Confidential Information), and except in compliance with Section 7.2. Without limiting the foregoing, when

 

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any Confidential Information furnished by the Disclosing Party pursuant to this Agreement is no longer needed for the purposes contemplated by this Agreement, each Party, in its capacity as the Receiving Party, shall, at its option, promptly after receiving a written notice from the Disclosing Party, either return to the Disclosing Party all such Confidential Information of the Disclosing Party in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the Disclosing Party that it has destroyed such Confidential Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, however, that the Receiving Party shall not be required to destroy or return any such Confidential Information of the Disclosing Party to the extent that (i) the Receiving Party is required to retain the Confidential Information of the Disclosing Party in order to comply with any applicable Law, (ii) the Confidential Information of the Disclosing Party has been backed up electronically pursuant to the Receiving Party’s standard document retention policies and will be managed and ultimately destroyed consistent with such policies or (iii) it is kept in the Receiving Party’s legal files for purposes of resolving any dispute that may arise under this Agreement, in each case, so long as Confidential Information remains subject to the protections of this Article VII.

(c) Third-Party Information; Privacy and Data Protection Laws. Each Party acknowledges that it and its respective Group members which may have as of the Effective Date and, may after the Effective Date, gain access to or possession of non-public Information of, or personal Information relating to, Third Parties: (i) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or a member of the other Party’s Group, on the other hand, prior to the Effective Date or (ii) that, as between the Parties, was originally collected by the other Party or a member of the other Party’s Group and that may be subject to and protected by privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause its Group members and its and their respective Representatives to hold, protect and use, in strict confidence the non-public Information of Third Parties in accordance with applicable Laws and the terms of any agreements between or among the other Party or members of the other Party’s Group, on the one hand, and such Third Parties, on the other hand; provided, however, that the other Party subject to any such agreement (including its Group members) shall advise the Party accessing or possessing the Third Party non-public or personal Information of any such confidentiality or non-disclosure agreement. Recipient will provide all notices, obtain all consents, and take all other steps necessary to comply with all applicable Law and policies for Recipient and its Group to collect and disclose to Provider and for Provider and its Group to use all information that is “personal information,” “personal data” or similar term under one or more applicable Laws (“Personal Data”) for the purposes as set out in this Agreement. The Parties acknowledge that they will each comply with their obligations under applicable Laws and regulations regarding the processing of Personal Data. The Parties acknowledge that they will each promptly notify the other if there is any accidental or unlawful destruction of, loss, alteration, disclosure of access to Personal Data processed pursuant to this Agreement. To the extent required by applicable Law, the Parties will enter into additional agreements on the processing of Personal Data, including, as applicable, standard contractual clauses and international data transfer agreements (each as may be required by the GDPR or UK GDPR, as defined below). To the extent a Provider or a member of Provider’s Group will receive or process Personal Data subject to the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CCPA”) on behalf of Recipient or Recipient’s Group where such receipt or processing is subject to the CCPA, Provider or its applicable Group member is a “service provider” (as such term is defined under the CCPA), and Provider shall (and

 

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shall cause its applicable Group members to): (i) in connection with processing the Personal Data, comply with applicable obligations under the CCPA and provide the same level of privacy protection as is required by the CCPA, (ii) notify Recipient without undue delay if Provider makes a determination that it can no longer meet its obligations under the CCPA; (iii) grant Recipient the right to take reasonable and appropriate steps to help ensure that Provider uses the Personal Data in a manner consistent with Recipient’s obligations under the CCPA and stop and remediate any unauthorized use of the Personal Data, and (iv) be prohibited from (1) selling or sharing for cross-context behavioral advertising purposes Personal Data, (2) retaining, using, or disclosing the Personal Data for any purpose other than for the specific purpose of performing the Services and/or outside of the direct business relationship between Provider and Recipient, and (3) combining the Personal Data received from Recipient with any Personal Data that may be collected from Provider’s separate interactions with the individual(s) to whom the Personal Data relates or from any other sources. To the extent a Provider or a member of Provider’s Group will receive or process Personal Data subject to the General Data Protection Regulation 2016/679 (the “EU GDPR”) or the UK General Data Protection Regulation (as defined by the UK Data Protection Act 2018 (“DPA”)) (together with the DPA, the “UK GDPR”), it shall (i) process the Personal Data only on the documented instructions of the Recipient unless otherwise required by applicable Law; (ii) ensure that its personnel authorized to process the Personal Data have committed themselves to confidentiality or are under an appropriate statutory obligation of confidentiality; (iii) implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk, taking into account the state of the art, the costs of implementation and the nature, scope, context and purpose of the processing; (iv) taking into account the nature of the processing, assist the Recipient by (A) appropriate technical and organizational measures, insofar as this is possible, for the fulfilment of the Recipient’s obligation to respond to requests for exercising data subject rights laid down in the GDPR and UK GDPR; and (B) with its compliance obligations under the GDPR and UK GDPR regarding security of processing, notification of data breaches, data protection impact assessments and, if required, prior consultation with relevant competent authorities; (v) at the choice of the Recipient and upon their instruction, delete or return all the Personal Data, unless Provider or the relevant member of the Provider’s Group is required to retain such Personal Data in accordance with applicable Law; (vi) make available to the Recipient all information necessary to demonstrate compliance with the obligations laid down in this paragraph and, as applicable, the GDPR and UK GDPR and contribute to audits and inspections regarding the same; and (vii) immediately inform the Recipient if, in its opinion, an instruction of the Recipient infringes the GDPR or UK GDPR (as applicable).

7.2 Protective Arrangements. In the event that either Party or any of its Affiliates, in the capacity of a Receiving Party, is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or is required pursuant to applicable Law or the rules of any stock exchange on which the shares of the Receiving Party or any member of its Group are traded to disclose or provide any Confidential Information of the Disclosing Party that is subject to the confidentiality provisions hereof, the Receiving Party shall provide the Disclosing Party with written notice of such request or demand (to the extent legally permitted) as promptly as practicable under the circumstances so that the Disclosing Party shall have an opportunity to seek an appropriate protective order, at the Disclosing Party’s own cost and expense. In the event that the Disclosing Party fails to seek or receive such appropriate protective order in a timely manner and the Receiving Party reasonably determines that its failure to disclose or provide the Disclosing

 

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Party’s Confidential Information shall actually prejudice the Receiving Party, then the Receiving Party may thereafter disclose or provide the Disclosing Party’s Confidential Information to the extent required by such Law or stock exchange (as so advised by its counsel) or by lawful process or such Governmental Authority, and the Receiving Party shall promptly provide the Disclosing Party with a copy of the Disclosing Party’s Confidential Information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom the Disclosing Party’s Confidential Information was disclosed, in each case to the extent legally permitted.

ARTICLE VIII.

DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY

8.1 Disclaimer of Warranties. WITHOUT LIMITING THE SERVICE STANDARD OR ANY REPRESENTATIONS OR WARRANTIES IN THE SEPARATION AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT (A) THE SERVICES ARE PROVIDED AS-IS, AND (B) NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE SERVICES AND EACH PARTY HEREBY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, MISAPPROPRIATION, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF THE SERVICES FOR A PARTICULAR PURPOSE.

8.2 Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EXCEPT FOR CLAIMS ARISING OUT OF A PARTY’S BREACH OF ARTICLE VII, FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY NOR ITS AFFILIATES SHALL BE LIABLE UNDER THIS AGREEMENT TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES, LOST PROFITS OR LOSS OF BUSINESS, WHETHER OR NOT SUCH DAMAGES WERE FORESEEABLE OR A PARTY WAS NOTIFIED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.

8.3 Limitation of Damages. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EXCEPT FOR CLAIMS ARISING OUT OF A PARTY’S BREACH OF ARTICLE VII, FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THE TOTAL AGGREGATE LIABILITY OF EACH PARTY AND ITS AFFILIATES, SUBCONTRACTORS, SUPPLIERS AND AGENTS FOR DAMAGES ARISING OUT OF THIS AGREEMENT, THE SERVICES OR THE ACTS OR OMISSIONS OF SUCH PARTY, ITS AFFILIATES AND ITS AND THEIR SUPPLIERS, SUBCONTRACTORS AND AGENTS IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED (A) WHERE SUCH PARTY IS THE PROVIDER, THE TOTAL FEES PAID OR PAYABLE BY RECIPIENT TO SUCH PARTY FOR THE SERVICES PROVIDED BY SUCH PARTY HEREUNDER, AND (B) WHERE SUCH PARTY IS THE RECIPIENT, THE TOTAL FEES PAID OR PAYABLE BY RECIPIENT TO SUCH PARTY FOR THE SERVICES PROVIDED TO SUCH PARTY HEREUNDER.

 

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ARTICLE IX.

MISCELLANEOUS

9.1 Counterparts; Entire Agreement; Corporate Power.

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to each other Party. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile, electronic mail (including .pdf, DocuSign or other electronic signature) or other transmission method shall be deemed to have been duly and validly delivered and shall be sufficient to bind the parties to the terms and conditions of this Agreement.

(b) This Agreement and the Separation Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein. With respect to the subject matter of this Agreement, in the event of a conflict between this Agreement and the Separation Agreement, this Agreement shall control.

(c) Each Party represents on behalf of itself and each other member of its Group as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes or will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof.

9.2 Governing Law. This Agreement (and any claims or Disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Ohio, irrespective of the choice of laws principles of the State of Ohio, including all matters of validity, construction, effect, enforceability, performance and remedies.

9.3 Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that neither Party may assign or otherwise transfer its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party or other parties thereto, as applicable.

 

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9.4 Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including, without limitation, any shareholders of a Party) except the Parties any rights or remedies hereunder; and there are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any third Person (including, without limitation, any shareholders of the Parties) with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

9.5 Notices. All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email with receipt confirmed, or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.5):

If to New Worthington, to:

Worthington Industries, Inc.

200 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Patrick Kennedy, General Counsel

Email: patrick.kennedy@worthingtonindustries.com

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

330 North Wabash Avenue, Suite 2800

Chicago, IL 60611

Attention: Cathy Birkeland; Christopher Drewry

Email: cathy.birkeland@lw.com; christopher.drewry@lw.com

If to Worthington Steel, to:

Worthington Steel, Inc.

100 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Michaune Tillman, General Counsel

Email: michaune.tillman@worthingtonindustries.com

Either Party may, by notice to the other Party, change the address and contact person to which any such notices are to be given.

9.6 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

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9.7 Force Majeure. No Party shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation, other than a delay or failure to make a payment, so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.

9.8 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

9.9 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement, the Separation Agreement, or any other Ancillary Agreement, shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

9.10 Dispute Resolution. Any and all disputes, controversies and claims arising hereunder, including with respect to the validity, interpretation, performance, breach or termination of this Agreement shall be resolved through the procedures provided in Article IV of the Separation Agreement.

9.11 Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement, or modification is sought to be enforced.

9.12 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement, the Separation Agreement, or any other Ancillary Agreements. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

 

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9.13 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.

9.14 Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a shareholder, director, employee, officer, agent or representative of New Worthington or Worthington Steel, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of New Worthington or Worthington Steel, as applicable, under this Agreement, the Separation Agreement or any other Ancillary Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of New Worthington or Worthington Steel, for itself and its respective Subsidiaries and its and their respective shareholders, directors, employees and officers, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.

9.15 Personnel. Provider of any Service shall be solely responsible for all salary, employment, and other benefits of and Liabilities relating to the employment of persons employed by such Provider. In performing their respective duties hereunder, all such employees and representatives of any Provider shall be under the direction, control, and supervision of such Provider, and such Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment, and compensation of such employees and representatives.

9.16 Exclusivity of Tax Matters. Notwithstanding any other provision of this Agreement (but subject to Section 4.2), the Tax Matters Agreement shall exclusively govern all matters related to Taxes (including allocations thereof) addressed therein. If there is a conflict between any provision of this Agreement, the Separation Agreement or of any other Ancillary Agreement (other than the Tax Matters Agreement), on the one hand, and the Tax Matters Agreement, on the other hand, and such provisions relate to matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall control.

9.17 Compliance. Notwithstanding any other provision herein, the Parties intend that the terms of this Agreement and the manner in which this Agreement is carried out in practice comply with all applicable Laws, regulations, and other binding guidance, including without limitation, federal and state health care compliance Laws which may apply to the New Worthington Group’s continued operation of a medical center and pharmacy (collectively, “Medical Center”). The Parties acknowledge and agree that the compensation set forth herein for all Services represents the fair market value of the Services provided, was negotiated in an arm’s-length transaction, and has not been determined in a manner which takes into account the volume or value of referrals or other business, if any, that may otherwise be generated between the Parties relative to the Medical Center. Nothing contained in this Agreement shall be construed in any manner as an obligation or inducement to make any referrals by either Party to the Medical Center. The Parties further agree that this Agreement does not involve the counseling or promotion of a business arrangement that violates applicable Law, and that the aggregate Services contracted for do not exceed those reasonably necessary to accomplish the commercially reasonable business purpose of such Services.

 

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[Signature Page to Follow.]

 

17


IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

WORTHINGTON INDUSTRIES, INC.
By:  

/s/ Joseph B. Hayek

Name:   Joseph B. Hayek
Title:   Vice President
WORTHINGTON STEEL, INC.
By:  

/s/ Timothy A. Adams

Name:   Timothy A. Adams
Title:   Vice President

Exhibit 10.2

TAX MATTERS AGREEMENT

BY AND BETWEEN

WORTHINGTON INDUSTRIES, INC.

AND

WORTHINGTON STEEL, INC.

DATED AS OF NOVEMBER 30, 2023


TABLE OF CONTENTS

 

         Page  

ARTICLE I. DEFINITIONS

     2  

1.1

  Definition of Terms      2  

ARTICLE II. ALLOCATION OF TAX LIABILITIES AND TAX-RELATED LOSSES

     9  

2.1

  General Rule      9  

2.2

  General Allocation Principles      10  

2.3

  Allocation Conventions      11  

ARTICLE III. PREPARATION AND FILING OF TAX RETURNS

     12  

3.1

  New Worthington Separate Returns and Joint Returns      12  

3.2

  Worthington Steel Separate Returns      12  

3.3

  Tax Reporting Practices      12  

3.4

  Protective Section 336(e) Elections      13  

3.5

  Worthington Steel Carrybacks and Claims for Refund      14  

3.6

  Apportionment of Tax Attributes      15  

ARTICLE IV. TAX PAYMENTS

     15  

4.1

  Taxes Shown on Tax Returns      15  

4.2

  Adjustments Resulting in Underpayments      16  

4.3

  Indemnification Payments      16  

ARTICLE V. TAX BENEFITS

     16  

5.1

  Tax Refunds      16  

5.2

  Other Tax Benefits      17  

ARTICLE VI. INTENDED TAX TREATMENT

     17  

6.1

  Restrictions on Members of the Worthington Steel Group      17  

6.2

  Restrictions on Members of the New Worthington Group      19  

6.3

  Procedures Regarding Opinions and Post-Distribution Rulings      19  

6.4

  Liability for Specified Separation Taxes and Tax-Related Losses      20  

ARTICLE VII. ASSISTANCE AND COOPERATION

     21  

7.1

  Assistance and Cooperation      21  

7.2

  Tax Return Information      21  

7.3

  Reliance by Worthington      22  

7.4

  Reliance by Worthington Steel      22  

7.5

  Other Separation Taxes      22  

ARTICLE VIII. TAX RECORDS

     23  

8.1

  Retention of Tax Records      23  

8.2

  Access to Tax Records      23  

8.3

  Preservation of Privilege      23  

ARTICLE IX. TAX CONTESTS

     24  

9.1

  Notice      24  

9.2

  Control of Tax Contests      24  

 

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ARTICLE X. SURVIVAL OF OBLIGATIONS

     26  

ARTICLE XI. TAX TREATMENT OF PAYMENTS

     26  

11.1

  General Rule      26  

11.2

  Interest      26  

ARTICLE XII. GROSS-UP OF INDEMNIFICATION PAYMENTS

     27  

ARTICLE XIII. MISCELLANEOUS

     27  

13.1

  Counterparts; Entire Agreement; Corporate Power      27  

13.2

  Governing Law      27  

13.3

  Assignability      28  

13.4

  Third Party Beneficiaries      28  

13.5

  Notices      28  

13.6

  Severability      29  

13.7

  Force Majeure      29  

13.8

  Headings      29  

13.9

  Survival of Covenants      29  

13.10

  Waivers of Default      29  

13.11

  Dispute Resolution      29  

13.12

  Amendments      30  

13.13

  Construction      30  

13.14

  Performance      30  

13.15

  Limited Liability      30  

13.16

  Limitations of Liability      30  

 

ii


TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (this “Agreement”) is entered into effective as of November 30, 2023, by and between Worthington Industries, Inc., an Ohio corporation (“New Worthington”), and Worthington Steel, Inc., an Ohio corporation and a wholly owned subsidiary of New Worthington (“Worthington Steel”). New Worthington and Worthington Steel are each a “Party” and are sometimes referred to herein collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I of this Agreement.

RECITALS

WHEREAS, New Worthington, acting together with its Subsidiaries, currently conducts the New Worthington Business and the Worthington Steel Business;

WHEREAS, New Worthington and Worthington Steel have entered into that certain Separation and Distribution Agreement dated as of November 30, 2023 (as amended, restated, amended and restated and otherwise modified from time to time, the “Separation Agreement”) pursuant to which Worthington Steel will separate from the rest of New Worthington and be established as a separate, publicly traded company to operate the Worthington Steel Business;

WHEREAS, as part of the Separation, Worthington Cylinders GmbH, an Austrian Gesellschaft mit beschränkter Haftung (“Internal Remainco”), has undertaken a demerger (the “Demerger”) pursuant to which (i) Internal Remainco transferred 100% of the equity interests in WSMX Holdings, an Ohio limited liability company, to Worthington Steel Holding GmbH, an Austrian Gesellschaft mit beschränkter Haftung established in the course of the Demerger (“Austrian Newco”), and (ii) Worthington Industries International S.a.r.l., a Luxembourg Société à Responsabilité Limitée that is for U.S. federal income tax purposes disregarded as an entity separate from Worthington Cylinder Corporation, an Ohio Corporation (“Worthington Cylinder Corporation”), receives 100% of the equity interests in Austrian Newco;

WHEREAS, as part of the Separation, New Worthington has contributed equity interests in certain entities to Worthington Steel in exchange for $150,000,000 in cash (the “Cash Boot”) and additional shares of Worthington Steel Stock (such exchange, the “Contribution”);

WHEREAS, following the Separation, New Worthington intends to distribute 100% of the issued and outstanding Worthington Steel Stock to holders of New Worthington Stock (together with the Contribution, the “Distribution”);

WHEREAS, following the Distribution, New Worthington intends to transfer the Cash Boot to one or more of New Worthington’s creditors in satisfaction of its debt and/or distribute the Cash Boot to New Worthington’s shareholders (the “Boot Purge”);

 

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WHEREAS, the Parties intend that (i) the Demerger qualify as a distribution under Section 355(a) of the Internal Revenue Code of 1986, as amended (the “Code”) that will be nontaxable for U.S. federal income tax purposes to Internal Remainco and Worthington Cylinder Corporation; (ii) the Contribution, taken together with the Distribution, qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code that will be nontaxable for U.S. federal income tax purposes to Worthington Steel, New Worthington and New Worthington’s shareholders, other than with respect to cash received in lieu of fractional shares, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code and Cash Boot not transferred in the Boot Purge; and (iii) the Boot Purge be treated as a transfer of money by New Worthington to its creditors in connection with the reorganization or as a distribution of money to its shareholders in pursuance of the plan of reorganization for purposes of Section 361(b)(1)(A) and (b)(3) of the Code (the treatment described in clauses (i) through (iii), the “Intended Tax Treatment”);

WHEREAS, New Worthington and Worthington Steel desire to set forth their agreement on the rights and obligations of New Worthington and Worthington Steel and the members of the New Worthington Group and the Worthington Steel Group, respectively, with respect to (i) the administration and allocation of federal, state, local, and foreign Taxes incurred in Tax Periods beginning prior to the Distribution Date, (ii) Taxes resulting from the Separation, Distribution and transactions effected in connection therewith and (iii) various other Tax matters.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement and in the Separation Agreement, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definition of Terms. For purposes of this Agreement (including the recitals hereof), Capitalized terms shall have the meanings set forth below in this Section 1.1 or elsewhere in this Agreement.

Active Trade or Business” means, with respect to the Worthington Steel SAG, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) of the Worthington Steel Business as conducted immediately prior to the Distribution by the Worthington Steel SAG.

Adjusted Grossed-Up Basis” has the meaning set forth in Section 3.4(b) of this Agreement.

Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (i) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (ii) any claim for equitable recoupment or other offset, and (iii) any claim for refund or credit of Taxes previously paid.

Affiliate” has the meaning set forth in the Separation Agreement.

Aggregate Deemed Asset Disposition Price” has the meaning set forth in Section 3.4(b) of this Agreement.

Agreement” means this Tax Matters Agreement.

 

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Allocation” has the meaning set forth in Section 3.6(b) of this Agreement.

Ancillary Agreements” has the meaning set forth in the Separation Agreement; provided, however, that for purposes of this Agreement, this Agreement shall not constitute an Ancillary Agreement.

Boot Purge” has the meaning set forth in the recitals to this Agreement.

Business Day” has the meaning set forth in the Separation Agreement.

Capital Stock” means all classes or series of capital stock of a corporation, including (i) common stock, (ii) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in such corporation for U.S. federal Income Tax purposes.

Cash Boot” has the meaning set forth in the recitals to this Agreement.

Closing of the Books Method” means the apportionment of items between portions of a Tax Period based on a closing of the books and records on the close of the Distribution Date (in the event that the Distribution Date is not the last day of the Tax Period, as if the Distribution Date were the last day of the Tax Period), subject to adjustment for items accrued on the Distribution Date that are properly allocable to the Tax Period following the Distribution Date, as jointly determined by New Worthington and Worthington Steel; provided, however, that with respect to Property Taxes, such apportionment shall be on the basis of elapsed days during the relevant portion of the Tax Period.

Code” has the meaning set forth in the recitals to this Agreement.

Controlling Party” has the meaning set forth in Section 9.2(c) of this Agreement.

Disputes” has the meaning set forth in the Separation Agreement.

Distribution” has the meaning set forth in the recitals to this Agreement.

Distribution Date” has the meaning set forth in the Separation Agreement.

Effective Time” has the meaning set forth in the Separation Agreement.

Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for any Tax Period, (i) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a state, local, or foreign taxing jurisdiction, except that an IRS Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Tax Period (as the case may be); (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted offer in compromise under Sections 7121

 

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or 7122 of the Code, or a comparable agreement under the laws of a state, local, or foreign taxing jurisdiction; (iv) by any allowance of a refund or credit in respect of an overpayment of a Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (v) by a final settlement resulting from a treaty-based competent authority determination; or (vi) by any other final disposition, including by reason of the expiration of the applicable statute of limitations, the execution of a pre-filing agreement with the IRS or other Tax Authority, or by mutual agreement of the Parties.

Governmental Authority” has the meaning set forth in the Separation Agreement.

Group” means (a) with respect to New Worthington, the New Worthington Group, and (b) with respect to Worthington Steel, the Worthington Steel Group, as the context requires.

Income Tax” means all U.S. federal, state, local and foreign income, franchise or similar Taxes imposed on (or measured by) net income or net profits, and any interest, penalties, additions to Tax or additional amounts in respect of the foregoing.

Intended Tax Treatment” has the meaning set forth in the recitals to this Agreement.

IRS” means the U.S. Internal Revenue Service or any successor agency.

Joint Return” means any Tax Return that includes, by election or otherwise, one or more members of the New Worthington Group together with one or more members of the Worthington Steel Group.

Law” has the meaning set forth in the Separation Agreement.

Loss” has the meaning set forth in Section 5.2(a) of this Agreement.

New Worthington” has the meaning set forth in the preamble to this Agreement.

New Worthington Business” has the meaning set forth in the Separation Agreement.

New Worthington Disqualifying Act” means, with respect to any Specified Separation Taxes, (a) any act, or failure or omission to act, including, without limitation, the breach of any covenant contained herein or in the Tax Materials, by any member of the New Worthington Group following the Distribution that results in any Party (or any of its Affiliates) being liable for such Specified Separation Taxes pursuant to a Final Determination, (b) any event (or series of events) involving Capital Stock or any assets of any member of the New Worthington Group or (c) any failure to be true, inaccuracy in, or breach of any of the representations or statements contained in the Tax Materials to the extent descriptive of or otherwise relating to any member of the New Worthington Group or the New Worthington Business.

New Worthington Group” has the meaning set forth in the Separation Agreement.

New Worthington Stock” has the meaning set forth in the Separation Agreement.

Non-Controlling Party” has the meaning set forth in Section 9.2(c) of this Agreement.

 

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New Worthington Separate Return” means any Tax Return of or including any member of the New Worthington Group (including any consolidated, combined or unitary return) that does not include any member of the Worthington Steel Group.

Notified Action” shall have the meaning set forth in Section 6.3(a) of this Agreement.

Other Separation Taxes” means any Taxes imposed on the New Worthington Group or the Worthington Steel Group in connection with the transactions comprising the Separation and Distribution, other than Specified Separation Taxes.

Parties” and “Party” have the meaning set forth in the preamble to this Agreement.

Past Practices” has the meaning set forth in Section 3.3(a) of this Agreement.

Payment Date” means, with respect to a Tax Return, (A) the due date for any required installment of estimated Taxes, (B) the due date (determined without regard to extensions) for filing such Tax Return, or (C) the date such Tax Return is filed, as the case may be.

Payor” has the meaning set forth in Section 4.3(a) of this Agreement.

Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Authority or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. federal Income Tax purposes.

Post-Distribution Period” means any Tax Period beginning after the Distribution Date and, in the case of any Straddle Period, the portion of such Tax Period beginning on the day after the Distribution Date.

Post-Distribution Ruling” has the meaning set forth in Section 6.1(b) of this Agreement.

Pre-Distribution Period” means any Tax Period ending on or before the Distribution Date and, in the case of any Straddle Period, the portion of such Straddle Period ending on and including the Distribution Date.

Prime Rate” shall have the meaning set forth in the Separation Agreement.

Prior Group” means any group that filed or was required to file (or will file or be required to file) a Tax Return, for a Tax Period or portion thereof ending at the close of the Distribution Date, on an affiliated, consolidated, combined, unitary, fiscal unity or other group basis (including as permitted by Section 1501 of the Code) that includes at least one member of the Worthington Steel Group.

Privilege” means any privilege that may be asserted under applicable law, including, any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

 

5


Property Taxes” means all real property Taxes, personal property Taxes and similar ad valorem Taxes.

Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulations § 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by Worthington Steel management or shareholders, is a hostile acquisition, or otherwise, as a result of which any Person or any group of related Persons would (directly or indirectly) acquire, or have the right to acquire, any shares of Capital Stock in Worthington Steel. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by Worthington Steel of a shareholder rights plan, (ii) issuances by Worthington Steel that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations § 1.355-7(d), including such issuances net of exercise price and/or tax withholding (provided, however, that any sale of such stock in connection with a net exercise or tax withholding is not exempt under this clause (ii) unless it satisfies the requirements of Safe Harbor VII of Treasury Regulations § 1.355-7(d)), or (iii) acquisitions that satisfy Safe Harbor VII of Treasury Regulations § 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. For purposes of this definition, each reference to Worthington Steel shall include a reference to any entity treated as a successor thereto. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

Protective Section 336(e) Election” has the meaning set forth in Section 3.4(a) of this Agreement.

Representation Letter” means any officer’s certificate, representation letter and other materials delivered or deliverable by New Worthington, and any of its Affiliates, in connection with the rendering by Tax Advisors of the Tax Advice.

Required Party” has the meaning set forth in Section 4.3(a) of this Agreement.

Responsible Party” means, with respect to any Tax Return, the Party having responsibility for preparing and filing such Tax Return under this Agreement.

Retention Date” has the meaning set forth in Section 8.1 of this Agreement.

Section 336(e) Allocation Statement” has the meaning set forth in Section 3.4(b) of this Agreement.

Section 336(e) Tax Benefit Percentage” means, with respect to any Specified Separation Taxes and Tax-Related Losses related to the Distribution, the percentage equal to one hundred percent (100%) minus the percentage of such Specified Separation Taxes and Tax-Related Losses related to the Distribution for which New Worthington is entitled to indemnification under this Agreement.

 

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Separation” means, collectively, all of the transactions undertaken to separate the Worthington Steel Business from the New Worthington Business in connection with and prior to the Distribution.

Separation Agreement” has the meaning set forth in the recitals to this Agreement.

Specified Separation Taxes” means any and all cash Taxes incurred by the New Worthington Group or the Worthington Steel Group as a result of the failure of the Intended Tax Treatment; provided, for the avoidance of doubt, that Specified Separation Taxes shall not include the use of or diminution in value of any Tax Attribute.

Straddle Period” means any Tax Period that begins before and ends after the Distribution Date.

Subsidiary” has the meaning set forth in the Separation Agreement.

Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, environmental, severance, occupation, service, sales, use, license, lease, transfer, import, export, escheat, alternative minimum, universal service fund, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax), imposed by any Governmental Authority or political subdivision thereof, and any interest, penalty, additions to tax or additional amounts in respect of the foregoing.

Tax Advice” means any opinions or memoranda of Tax Advisors deliverable to New Worthington in connection with the Demerger, Contribution, Distribution or Boot Purge.

Tax Advisor” means a Tax counsel or accountant, in each case of recognized national standing.

Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign Tax credit, excess charitable contribution, general business credit, research and development credit, earnings and profits, basis, or any other Tax Item that could reduce a Tax or create a Tax Benefit.

Tax Authority” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

Tax Benefit” means any refund, credit, or other item that causes reduction in otherwise required liability for Taxes.

Tax Contest” means an audit, review, examination, contest, litigation, investigation or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

 

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Tax Item” means, with respect to any Income Tax, any item of income, gain, loss, deduction, or credit.

Tax Law” means the Law of any Governmental Authority or political subdivision thereof relating to any Tax.

Tax Materials” means the Tax Advice, the Representation Letter and any other materials delivered or deliverable or information provided by New Worthington or Worthington Steel, or their respective Tax Advisors or Affiliates, in connection with the Tax Advice.

Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

Tax Records” means any (i) Tax Returns, (ii) Tax Return workpapers, (iii) documentation relating to any Tax Contests, and (iv) any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) maintained or required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority, in each case filed or required to be filed with respect to or otherwise relating to Taxes.

Tax-Related Losses” means, with respect to any Specified Separation Taxes, (i) all accounting, legal and other professional fees, and court costs incurred in connection with such Specified Separation Taxes, as well as any other out-of-pocket costs incurred in connection with such Specified Separation Taxes; and (ii) all costs, expenses and damages associated with shareholder litigation or controversies and any amount paid by New Worthington (or any New Worthington Affiliate) or Worthington Steel (or any Worthington Steel Affiliate) in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority.

Tax Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document filed or required to be filed under the Code or other Tax Law with respect to Taxes, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

Third Party” means any Person other than the Parties or any of their respective Subsidiaries.

Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor, which Tax Advisor is reasonably acceptable to New Worthington, on which New Worthington may rely to the effect that a transaction will not adversely affect the Intended Tax Treatment. Any such opinion must assume that the Demerger, Contribution, Distribution and Boot Purge would have qualified for the Intended Tax Treatment if the transaction in question did not occur.

Worthington Steel” has the meaning provided in the preamble to this Agreement.

 

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Worthington Steel Business” has the meaning set forth in the Separation Agreement.

Worthington Steel Carryback” means any net operating loss, net capital loss, excess Tax credit, or other similar Tax item of any member of the Worthington Steel Group which may or must be carried from one Tax Period to another prior Tax Period under the Code or other applicable Tax Law.

Worthington Steel Disqualifying Act” means, with respect to any Specified Separation Taxes, (a) any act, or failure or omission to act, including, without limitation, the breach of any covenant contained herein or in the Tax Materials, by any member of the Worthington Steel Group that results in any Party (or any of its Affiliates) being liable for such Specified Separation Taxes pursuant to a Final Determination, regardless of whether such act or failure to act is covered by a Post-Distribution Ruling or Unqualified Tax Opinion, (b) any event (or series of events) involving Capital Stock or any assets of any member of the Worthington Steel Group or (c) any failure to be true, inaccuracy in, or breach of any of the representations or statements contained in the Tax Materials to the extent descriptive of or otherwise relating to any member of the Worthington Steel Group or the Worthington Steel Business.

Worthington Steel Equity Awards” means options, share appreciation rights, restricted shares, share units or other compensatory rights with respect to Worthington Steel Stock.

Worthington Steel Group” has the meaning set forth in the Separation Agreement.

Worthington Steel SAG” means the separate affiliated group of Worthington Steel, within the meaning of Section 355(b)(3)(B) of the Code.

Worthington Steel Separate Domestic Income Return” means any Worthington Steel Separate Return reporting Income Taxes that is filed, or required to be filed, with any Tax Authority of the United States or any state or political subdivision thereof.

Worthington Steel Separate Return” means any Tax Return of or including any member of the Worthington Steel Group (including any consolidated, combined or unitary return) that does not include any member of the New Worthington Group.

Worthington Steel Stock” has the meaning set forth in the Separation Agreement.

ARTICLE II.

ALLOCATION OF TAX LIABILITIES AND TAX-RELATED LOSSES

2.1 General Rule.

(a) New Worthington Liability. Except with respect to Taxes and Tax-Related Losses described in Section 2.1(b) of this Agreement, New Worthington shall be liable for, and shall indemnify and hold harmless the Worthington Steel Group from and against any liability for:

(i) Taxes that are allocated to New Worthington under this Article II;

 

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(ii) any Taxes resulting from a breach of any of New Worthington’s covenants in this Agreement, the Separation Agreement or any Ancillary Agreement;

(iii) Specified Separation Taxes and Tax-Related Losses that are allocated to New Worthington under Section 6.4(a) of this Agreement;

(iv) Fifty percent (50%) of Other Separation Taxes; and

(v) Taxes (other than those that are allocated to Worthington Steel under Section 2.1(b)) imposed on Worthington Steel or any member of the Worthington Steel Group pursuant to the provisions of Treasury Regulations § 1.1502-6 (or similar provisions of state, local, or foreign Tax Law) as a result of any such member being or having been a member of a Prior Group.

(b) Worthington Steel Liability. Worthington Steel shall be liable for, and shall indemnify and hold harmless the New Worthington Group from and against any liability for:

(i) Taxes which are allocated to Worthington Steel under this Article II;

(ii) any Taxes resulting from a breach of any of Worthington Steel’s covenants in this Agreement, the Separation Agreement or any Ancillary Agreement;

(iii) any Specified Separation Taxes and Tax-Related Losses that are allocated to Worthington Steel under Section 6.4(a) of this Agreement; and

(iv) Fifty percent (50%) of Other Separation Taxes.

2.2 General Allocation Principles. Except as otherwise provided in this Article II or in Section 6.4(a) of this Agreement, all Taxes shall be allocated as follows:

(a) Allocation of Taxes for Joint Returns. Except as otherwise provided in Section 2.2(c), New Worthington shall be responsible for all Taxes reported, or required to be reported, on any Joint Return that any member of the New Worthington Group files or is required to file under the Code or other applicable Tax Law; provided, however, that to the extent any such Joint Return includes any Tax Item attributable to any member of the Worthington Steel Group or to the Worthington Steel Business for any Post-Distribution Period, Worthington Steel shall be responsible for all Taxes attributable to such Tax Items, computed in a manner reasonably determined by New Worthington.

(b) Allocation of Taxes for Separate Returns.

(i) Except as otherwise provided in Section 2.2(c), New Worthington shall be responsible for all Taxes reported, or required to be reported, on (A) a New Worthington Separate Return or (B) a Worthington Steel Separate Domestic Income Return that relates solely to any Tax Period ending on or before the Distribution Date.

 

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(ii) Except as otherwise provided in Section 2.2(b)(i) or Section 2.2(c), Worthington Steel shall be responsible for all Taxes reported, or required to be reported, on a Worthington Steel Separate Return.

(c) Allocation of Taxes Arising from Adjustments or Redeterminations.

(i) New Worthington shall be responsible for any increases in Taxes as a result of any adjustment or redetermination or otherwise as result of a Tax Contest to the extent such increase is attributable to any member of the New Worthington Group or the New Worthington Business, as reasonably determined by New Worthington.

(ii) Worthington Steel shall be responsible for any increases in Taxes as a result of any adjustment or redetermination or otherwise as result of a Tax Contest to the extent such increase is attributable to any member of the Worthington Steel Group or the Worthington Steel Business, as reasonably determined by New Worthington.

(d) Taxes Not Reported on Tax Returns.

(i) New Worthington shall be responsible for any Tax attributable to any member of the New Worthington Group or to the New Worthington Business (as reasonably determined by New Worthington) that is not required to be reported on a Tax Return.

(ii) Worthington Steel shall be responsible for any Tax attributable to any member of the Worthington Steel Group or the Worthington Steel Business (as reasonably determined by New Worthington) that is not required to be reported on a Tax Return.

2.3 Allocation Conventions.

(a) All Taxes required to be allocated to a Pre-Distribution Period or Post-Distribution Period pursuant to Section 2.2 of this Agreement shall be allocated in accordance with the Closing of the Books Method as reasonably computed by New Worthington.

(b) Any Tax Item of Worthington Steel or any member of the Worthington Steel Group arising from a transaction engaged in outside of the ordinary course of business on the Distribution Date after the Effective Time shall be properly allocable to Worthington Steel and any such transaction by or with respect to Worthington Steel or any member of the Worthington Steel Group occurring after the Effective Time shall be treated for all Tax purposes (to the extent permitted by applicable Tax Law) as occurring at the beginning of the day following the Distribution Date in accordance with the principles of Treasury Regulations Section 1.1502-76(b) or any similar provisions of state, local or foreign Law.

 

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ARTICLE III.

PREPARATION AND FILING OF TAX RETURNS

3.1 New Worthington Separate Returns and Joint Returns.

(a) New Worthington shall prepare and file, or cause to be prepared and filed, all New Worthington Separate Returns and Joint Returns, and each member of the Worthington Steel Group to which any such Joint Return relates shall execute and file such consents, elections and other documents as New Worthington may determine, after consulting with Worthington Steel in good faith, are required or appropriate, or otherwise requested by New Worthington in connection with the filing of such Joint Return. Worthington Steel will elect and join, and will cause its respective Affiliates to elect and join, in filing any Joint Returns that New Worthington determines are required to be filed or that New Worthington elects to file, in each case pursuant to this Section 3.1.

(b) The Parties and their respective Affiliates shall elect to close the Tax Period of each Worthington Steel Group member on the Distribution Date, to the extent permitted by applicable Tax Law.

3.2 Worthington Steel Separate Returns.

(a) Tax Returns to be Prepared by New Worthington. New Worthington shall prepare (or cause to be prepared) and, to the extent permitted by applicable Tax Law, file (or cause to be filed) all Worthington Steel Separate Domestic Income Returns that relate solely to any Tax Period ending on or before the Distribution Date; provided, however, that with respect to any such Tax Return that is prepared by New Worthington but required to be filed by a member of the Worthington Steel Group under applicable Tax Law, New Worthington shall provide such Tax Returns to Worthington Steel at least five (5) Business Days prior to the due date for filing such Tax Returns (taking into account any applicable extension periods) with the amount of any Taxes shown as due thereon, and Worthington Steel shall execute and file (or cause to be executed and filed) such Tax Returns.

(b) Tax Returns to be Prepared by Worthington Steel. Worthington Steel shall prepare and file (or cause to be prepared and filed) all Worthington Steel Separate Returns that are not described in Section 3.2(a). With respect to any Worthington Steel Separate Return that relates to a Pre-Distribution Period (including a Straddle Period), Worthington Steel shall submit a draft of such Tax Return to New Worthington at least fifteen (15) days prior to the due date for the filing of such Tax Return (taking into account any applicable extensions), New Worthington shall have the right to review such Tax Return and to submit to Worthington Steel any reasonable changes to such Tax Return no later than five (5) days prior to the due date for the filing of such Tax Return (taking into account any applicable extensions), and Worthington Steel shall accept any such reasonable changes; provided, however, that nothing herein shall prevent Worthington Steel from timely filing (or causing to be timely filed) such Tax Return. The Parties agree to consult and to attempt to resolve in good faith any issues arising as a result of the review of any such Tax Return.

3.3 Tax Reporting Practices.

(a) General Rule. Except as provided in Section 3.3(b) of this Agreement, New Worthington shall prepare any Joint Return with respect to a Straddle Period in accordance with past practices, permissible accounting methods, elections or conventions (“Past Practices”) used by the members of the New Worthington Group and the members of the Worthington Steel Group prior to the Distribution Date with respect to such Tax Return, and to the extent any items, methods or positions are not covered by Past Practices, then New Worthington shall prepare such Tax Return in accordance with reasonable Tax accounting practices selected by New Worthington.

 

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With respect to any Tax Return that Worthington Steel has the obligation or right to prepare, or cause to be prepared, under this Article III, to the extent such Tax Return could affect New Worthington, such Tax Return shall be prepared in accordance with Past Practices used by the members of the New Worthington Group and the members of the Worthington Steel Group prior to the Distribution Date with respect to such Tax Return; provided, however, that to the extent any items, methods or positions are not covered by Past Practices, such Tax Return shall be prepared in accordance with reasonable Tax accounting practices selected by Worthington Steel with the approval of New Worthington, such approval not to be unreasonably withheld, conditioned or delayed.

(b) Interests in Partnerships. To the extent that any interest in an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes is transferred or deemed transferred in connection with the Separation or Distribution, the Parties shall, and shall cause their respective Groups to, use commercially reasonably efforts to cause such partnership to use the interim closing method with respect to such transfer.

(c) Consistency with Intended Tax Treatment. The Parties shall prepare all Tax Returns consistent with the Intended Tax Treatment unless, and then only to the extent, an alternative position is required pursuant to a Final Determination.

3.4 Protective Section 336(e) Elections.

(a) General. The Parties hereby agree that, if New Worthington shall determine in its sole discretion, prior to the applicable due dates of such elections, that the Parties should make protective elections under Section 336(e) of the Code (and any similar provision of applicable state or local Tax Law) with respect to the Distribution for Worthington Steel and each member of the Worthington Steel Group that is a domestic corporation for U.S. federal Income Tax purposes (the “Protective Section 336(e) Elections”), then the Parties shall enter into a written, binding agreement to make the Protective Section 336(e) Elections, and the Parties shall timely make the Protective Section 336(e) Elections in accordance with Treasury Regulations § 1.336-2(h). For the avoidance of doubt, such agreement is intended to constitute a written, binding agreement to make the Protective Section 336(e) Elections within the meaning of Treasury Regulations § 1.336-2(h)(1)(i).

(b) Cooperation and Reporting. New Worthington and Worthington Steel shall cooperate in making the Protective Section 336(e) Elections, if any, including filing any statements, amending any Tax Returns or undertaking such other actions reasonably necessary to carry out the Protective Section 336(e) Elections. New Worthington shall determine the “Aggregate Deemed Asset Disposition Price” and the “Adjusted Grossed-Up Basis” (each as defined under applicable Treasury Regulations) and the allocation of such Aggregate Deemed Asset Disposition Price and Adjusted Grossed-Up Basis among the disposition date assets of the applicable member or members of the New Worthington Group or Worthington Steel Group, each in accordance with the applicable provisions of Section 336(e) of the Code and applicable Treasury Regulations (the “Section 336(e) Allocation Statement”). Each Party agrees not to take any position (and to cause each of its Affiliates not to take any position) that is inconsistent with the Protective Section 336(e) Elections, including the Section 336(e) Allocation Statement, on any Tax Return, in connection with any Tax Contest or for any other Tax purposes (in each case, excluding any position taken for financial accounting purposes), except as may be required by a Final Determination.

 

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(c) Tax Benefit Payments by Worthington Steel. In the event that the Distribution fails to qualify for the Intended Tax Treatment and New Worthington is not entitled to indemnification for one hundred percent (100%) of any Specified Separation Taxes and Tax-Related Losses relating to the Distribution arising from such failure, New Worthington shall be entitled to quarterly payments from Worthington Steel equal to the Section 336(e) Tax Benefit Percentage of the actual Tax savings if, as and when realized by the Worthington Steel Group arising from the step up in Tax basis (including, for the avoidance of doubt, any such step up attributable to payments made pursuant to this Section 3.4(c)) resulting from the Protective Section 336(e) Election, determined on a “with and without” basis (treating any deductions or amortization attributable to the step up in Tax basis resulting from the Protective 336(e) Election, or any other recovery of such step up, as the last items claimed for any taxable year, including after the utilization of any available net operating loss carryforwards); provided, however, that such payments: (i) shall be reduced by all reasonable costs incurred by any member of the Worthington Steel Group to amend any Tax Returns or other governmental filings related to such Protective Section 336(e) Election and (ii) shall not exceed the amount of any Specified Separation Taxes and Tax-Related Losses relating to the Distribution incurred by the New Worthington Group (not taking into account this Section 3.4(c)) as a result of such failure for which New Worthington is not entitled to indemnification under this Agreement.

3.5 Worthington Steel Carrybacks and Claims for Refund.

(a) Worthington Steel hereby agrees that, unless New Worthington consents in writing (which consent may not be unreasonably withheld, conditioned, or delayed) or as required by Law, (i) no member of the Worthington Steel Group (nor its successors) shall file any Adjustment Request with respect to any Tax Return that could affect any Joint Return or any other Tax Return reflecting Taxes that are allocated to New Worthington under Article II and (ii) any available elections to waive the right to claim any Worthington Steel Carryback in any Joint Return or any other Tax Return reflecting Taxes that are allocated to New Worthington under Article II shall be made, and no affirmative election shall be made to claim any such Worthington Steel Carryback. In the event that Worthington Steel (or the appropriate member of the Worthington Steel Group) is prohibited by applicable Law from waiving or otherwise foregoing a Worthington Steel Carryback or New Worthington consents to a Worthington Steel Carryback (which consent may not be unreasonably withheld, conditioned, or delayed), New Worthington shall cooperate with Worthington Steel, at Worthington Steel’s expense, in seeking from the appropriate Tax Authority such Tax Benefit as reasonably would result from such Worthington Steel Carryback, to the extent that such Tax Benefit is directly attributable to such Worthington Steel Carryback, and shall pay over to Worthington Steel the amount of such Tax Benefit within ten (10) days after such Tax Benefit is recognized by the New Worthington Group; provided, however, that Worthington Steel shall indemnify and hold the members of the New Worthington Group harmless from and against any and all collateral Tax consequences resulting from or caused by any such Worthington Steel Carryback, including, without limitation, the loss or postponement of any benefit from the use of Tax Attributes generated by a member of the New Worthington Group if (i) such Tax Attributes expire unused, but would have been utilized but for such Worthington Steel Carryback, or (ii) the use of such Tax Attributes is postponed to a later Tax Period than the Tax Period in which such Tax Attributes would have been used but for such Worthington Steel Carryback.

 

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(b) New Worthington hereby agrees that, unless Worthington Steel consents in writing (which consent may not be unreasonably withheld, conditioned, or delayed) or as required by Law, no member of the New Worthington Group shall file any Adjustment Request with respect to any Worthington Steel Separate Return.

3.6 Apportionment of Tax Attributes.

(a) Tax Attributes arising in a Pre-Distribution Period will be allocated to (and the benefits and burdens of such Tax Attributes will inure to) the members of the New Worthington Group and the members of the Worthington Steel Group in accordance with the Code, Treasury Regulations, and any other applicable Tax Law, and, in the absence of controlling legal authority or unless otherwise provided under this Agreement, Tax Attributes shall be allocated to the legal entity that created such Tax Attributes.

(b) On or before the first anniversary of the Distribution Date, New Worthington shall deliver to Worthington Steel its determination in writing of the portion, if any, of any earnings and profits, Tax Attributes, overall foreign loss or other affiliated, consolidated, combined, unitary, fiscal unity or other group basis Tax Attribute which is allocated or apportioned to the members of the Worthington Steel Group under applicable Tax Law and this Agreement (the “Allocation”). All members of the New Worthington Group and Worthington Steel Group shall prepare all Tax Returns in accordance with the Allocation. In the event of an adjustment to the earnings and profits, any Tax Attributes, overall foreign loss or other affiliated, consolidated, combined, unitary, fiscal unity or other group basis attribute, New Worthington shall promptly notify Worthington Steel in writing of such adjustment. For the avoidance of doubt, New Worthington shall not be liable to any member of the Worthington Steel Group for any failure of any determination under this Section 3.6(b) to be accurate under applicable Tax Law; provided such determination was made in good faith.

(c) Except as otherwise provided herein, to the extent that the amount of any Tax Attribute is later reduced or increased by a Tax Authority or Tax Proceeding, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 3.6(a) of this Agreement, as agreed by the Parties.

ARTICLE IV.

TAX PAYMENTS

4.1 Taxes Shown on Tax Returns. New Worthington shall pay (or cause to be paid) to the proper Tax Authority the Tax shown as due on any Tax Return that a member of the New Worthington Group is responsible for preparing under Article III of this Agreement, and Worthington Steel shall pay (or cause to be paid) to the proper Tax Authority the Tax shown as due on any Tax Return that a member of the Worthington Steel Group is responsible for preparing under Article III of this Agreement. At least seven (7) Business Days prior to any Payment Date for any such Tax Return, Worthington Steel shall pay to New Worthington the amount Worthington Steel is responsible for under the provisions of Article II with respect to such Tax Return as reasonably calculated by New Worthington pursuant to this Agreement.

 

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4.2 Adjustments Resulting in Underpayments. In the case of any adjustment pursuant to a Final Determination with respect to any Tax, the Party to which such Tax is allocated pursuant to this Agreement shall pay to the applicable Tax Authority when due any additional Tax required to be paid as a result of such adjustment.

4.3 Indemnification Payments.

(a) Except as provided in the last sentence of Section 4.1 of this Agreement, if any Party (the “Payor”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Party (the “Required Party”) is liable for under this Agreement, the Required Party shall reimburse the Payor within twenty (20) Business Days of delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Except as otherwise provided in the following sentence, the Required Party shall also pay to the Payor any reasonable costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses) within five (5) days after the Payor’s written demand therefor. If and to the extent any Specified Separation Taxes are determined regarding the failure of the Intended Tax Treatment, the Party allocated responsibility for Tax-Related Losses associated with such Specified Separation Taxes under Section 2.1 of this Agreement shall pay such Tax-Related Losses to New Worthington (if such responsible Party is Worthington Steel) or Worthington Steel (if such responsible Party is New Worthington) within five (5) days after written demand therefor. Notwithstanding the foregoing, if New Worthington or Worthington Steel disputes in good faith the fact or the amount of its obligation hereunder, then no payment of the amount in dispute shall be required until any such good faith dispute is resolved; provided, however, that any amount not paid by the due date otherwise provided in this Article IV shall bear interest from such due date computed at the Prime Rate plus one and one-half percent (1.5%) or the maximum rate permitted by Law, whichever is less.

(b) All indemnification payments under this Agreement shall be made by New Worthington directly to Worthington Steel and by Worthington Steel directly to New Worthington; provided, however, that if the Parties mutually agree for administrative convenience with respect to any such indemnification payment, any member of the New Worthington Group, on the one hand, may make such indemnification payment to any member of the Worthington Steel Group, on the other hand, and vice versa.

ARTICLE V.

TAX BENEFITS

5.1 Tax Refunds. New Worthington shall be entitled (subject to the limitations provided in Section 3.5 of this Agreement) to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which New Worthington is liable hereunder (determined without regard to Section 2.2(c)), and Worthington Steel shall be entitled (subject to the limitations provided in Section 3.5 of this Agreement) to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which Worthington Steel is liable hereunder (determined without regard to Section 2.2(c)).

 

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5.2 Other Tax Benefits.

(a) If a member of the Worthington Steel Group or New Worthington Group actually realizes any Tax Benefit, as a result of any liability, obligation, loss or payment (each, a “Loss”) for which a member of one Party’s Group is required to indemnify any member of the other Party’s Group pursuant to this Agreement, the Separation Agreement or any Ancillary Agreement (in each case, without duplication of any amounts payable or taken into account under this Agreement, the Separation Agreement or any Ancillary Agreement), and such Tax Benefit would not have arisen but for such adjustment or Loss (determined on a “with and without” basis), the Party whose Group actually recognizes such Tax Benefit in the Tax Period of the applicable Loss shall make a payment to the other Party in an amount equal to the amount of such actually recognized Tax Benefit in cash promptly following determination of the amount of such Tax Benefit pursuant to Section 5.2(b), but in any event within forty (40) Business Days of actually recognizing such Tax Benefit. To the extent that any Tax Benefit (or portion thereof) in respect of which any amounts were paid over pursuant to the foregoing provisions of this Section 5.2(a) is subsequently disallowed by the applicable Tax Authority, the Party that received such amounts shall promptly repay such amounts (together with any penalties, interest or other charges imposed by the relevant Tax Authority) to the other Party.

(b) No later than ten (10) Business Days after a Tax Benefit described in Section 5.2(a) is actually recognized by a member of the New Worthington Group or a member of the Worthington Steel Group in the Tax Period of the applicable Loss, New Worthington or Worthington Steel, as the case may be, shall provide the other Party with a written calculation of the amount payable to such other Party pursuant to Section 5.2(a). In the event that New Worthington or Worthington Steel, as the case may be, disagrees with any such calculation described in this Section 5.2(b), such Party shall so notify the other Party in writing within twenty (20) Business Days of receiving such written calculation. The Parties shall endeavor in good faith to resolve such disagreement.

ARTICLE VI.

INTENDED TAX TREATMENT

6.1 Restrictions on Members of the Worthington Steel Group.

(a) Worthington Steel will not, and will not permit any other member of the Worthington Steel Group to, take or fail to take, as applicable, (i) any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in the Tax Materials, (ii) any action where such action or failure to act could reasonably be expected to adversely affect the Intended Tax Treatment or (iii) any position on a Tax Return which could reasonably be expected to adversely affect any member of the New Worthington Group.

 

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(b) Worthington Steel and each other member of the Worthington Steel Group agrees that, from the Distribution Date until the first Business Day after the two-year anniversary of the Distribution Date:

(i) Worthington Steel will continue and cause to be continued the Active Trade or Business of the Worthington Steel SAG;

(ii) Worthington Steel will not enter into any Proposed Acquisition Transaction or, to the extent Worthington Steel or any other member of the Worthington Steel Group has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (A) redeeming rights under a shareholder rights plan, (B) finding a tender offer to be a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, (C) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the General Corporation Law of the State of Delaware or any similar corporate statute, any “fair price” or other provision of the charter or bylaws of Worthington Steel, (D) amending its certificate of incorporation to declassify its board of directors or approving any such amendment, or (E) otherwise);

(iii) Worthington Steel will not, nor will it agree to, merge, consolidate or amalgamate with any other Person, unless, in the case of a merger or consolidation, Worthington Steel is the survivor of the merger or consolidation;

(iv) Worthington Steel will not in a single transaction or series of transactions sell, transfer or otherwise dispose of (including any transaction treated for U.S. federal Income Tax purposes as a sale, transfer or disposition), or permit any other member of the Worthington Steel Group to sell, transfer or otherwise dispose of, 30% or more of the gross assets of the Active Trade or Business (such percentage to be measured based on fair market value as of the Distribution Date), in each case other than (A) sales, transfers or other dispositions of assets in the ordinary course of business, (B) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (C) any assets transferred to a Person that is disregarded as an entity separate from the transferor for U.S. federal Income Tax purposes, (D) any mandatory or optional repayment (or pre-payment) of any indebtedness of Worthington Steel or any member of the Worthington Steel Group, or (E) any sales, transfers or other dispositions of assets within the Worthington Steel SAG;

(v) Worthington Steel will not redeem or otherwise repurchase (directly or through an Affiliate) any stock, or rights to acquire stock, of Worthington Steel, except (A) to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48), (B) to the extent reasonably necessary to pay the total tax liability arising from the vesting of a Worthington Steel Equity Award, or (C) through a net exercise of a Worthington Steel Equity Award;

(vi) Worthington Steel will not amend, or permit any other member of the Worthington Steel Group to amend, its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of Capital Stock of Worthington Steel (including, without limitation, through the conversation of one class of Capital Stock of Worthington Steel into another class of Capital Stock of Worthington Steel); and

 

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(vii) Worthington Steel will not take, or permit any other member of the Worthington Steel Group to take, any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Tax Materials) which in the aggregate (and taking into account any other transactions described in this subparagraph (b)) would reasonably be expected to result in a failure to preserve the Intended Tax Treatment;

unless prior to taking any such action set forth in the foregoing clauses (i) through (vii), (A) Worthington Steel shall have obtained a ruling from the IRS to the effect that a transaction will not affect the Intended Tax Treatment (a “Post-Distribution Ruling”), and New Worthington shall have received such a Post-Distribution Ruling in form and substance satisfactory to New Worthington in its reasonable discretion, which discretion shall be exercised in good faith solely to preserve the Intended Tax Treatment, (B) Worthington Steel shall have provided New Worthington with an Unqualified Tax Opinion in form and substance satisfactory to New Worthington in its reasonable discretion (and in determining whether an opinion is satisfactory, New Worthington may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion) or (C) New Worthington shall have waived the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion.

6.2 Restrictions on Members of the New Worthington Group. New Worthington will not, and will not permit any other member of the New Worthington Group to, take or fail to take, as applicable, any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in the Tax Materials. New Worthington agrees that it will not take or fail to take, or permit any member of the New Worthington Group, as the case may be, to take or fail to take, any action where such action or failure to act could reasonably be expected to adversely affect the Intended Tax Treatment.

6.3 Procedures Regarding Opinions and Post-Distribution Rulings.

(a) If Worthington Steel notifies New Worthington that it desires to take one of the actions described in Section 6.1(b) of this Agreement (a “Notified Action”), New Worthington shall cooperate with Worthington Steel and use its commercially reasonable efforts to seek to obtain a Post-Distribution Ruling or Unqualified Tax Opinion for the purpose of permitting Worthington Steel to take the Notified Action unless New Worthington shall have waived the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion. If such a Post-Distribution Ruling is to be sought, New Worthington shall apply for such Post-Distribution Ruling and New Worthington and Worthington Steel shall jointly control the process of obtaining such Post-Distribution Ruling. In no event shall New Worthington be required to file any request for a Post-Distribution Ruling under this Section 6.3(a) unless Worthington Steel represents that (i) it has read such request, and (ii) all information and representations, if any, relating to any member of the Worthington Steel Group, contained in such request documents are (subject to any qualifications therein) true, correct and complete. Worthington Steel shall reimburse New Worthington for all reasonable costs and expenses incurred by the New Worthington Group in connection with such cooperation within thirty (30) Business Days after receiving an invoice from New Worthington therefor.

 

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(b) New Worthington shall have the right to obtain a Post-Distribution Ruling or tax opinion at any time in its sole and absolute discretion. If New Worthington determines to obtain a Post-Distribution Ruling or tax opinion, Worthington Steel shall (and shall cause its Affiliates to) cooperate with New Worthington and take any and all actions reasonably requested by New Worthington in connection with obtaining the Post-Distribution Ruling or tax opinion (including, without limitation, by making any reasonable representation or covenant or providing any materials or information requested by the IRS or any Tax Advisor). New Worthington shall reimburse Worthington Steel for all reasonable costs and expenses incurred by the Worthington Steel Group in connection with such cooperation within thirty (30) Business Days after receiving an invoice from Worthington Steel therefor.

(c) Following the Effective Time, Worthington Steel shall not, nor shall Worthington Steel permit any of its Affiliates to, seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Separation (including the impact of any transaction on the Intended Tax Treatment) without obtaining New Worthington’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.

6.4 Liability for Specified Separation Taxes and Tax-Related Losses.

(a) In the event that Specified Separation Taxes become due and payable to a Tax Authority pursuant to a Final Determination, then, notwithstanding anything to the contrary in this Agreement:

(i) if such Specified Separation Taxes are attributable to a Worthington Steel Disqualifying Act, then Worthington Steel shall be responsible for such Specified Separation Taxes and corresponding Tax-Related Losses;

(ii) if such Specified Separation Taxes are attributable to a New Worthington Disqualifying Act, then New Worthington shall be responsible for such Specified Separation Taxes and corresponding Tax-Related Losses; and

(iii) if such Specified Separation Taxes are attributable to both a Worthington Steel Disqualifying Act and a New Worthington Disqualifying Act, or are not attributable to either a Worthington Steel Disqualifying Act or a New Worthington Disqualifying Act, then responsibility for such Specified Separation Taxes and corresponding Tax-Related Losses shall be shared fifty percent (50%) by Worthington Steel and fifty percent (50%) by New Worthington.

(b) Worthington Steel shall pay New Worthington the amount of any Specified Separation Taxes for which Worthington Steel is responsible under this Section 6.4 as a result of a Final Determination no later than ten (10) Business Days after the date such Specified Separation Taxes are determined as a result of a Final Determination to be due.

 

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ARTICLE VII.

ASSISTANCE AND COOPERATION

7.1 Assistance and Cooperation.

(a) The Parties shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Parties and their Affiliates, including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to any other Party and its Affiliates reasonably available to such other Party as provided in Article VIII of this Agreement. Each of the Parties shall also make available to any other Party, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Parties or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes. Worthington Steel and each other member of the Worthington Steel Group shall cooperate with New Worthington and take any and all actions reasonably requested by New Worthington in connection with the Tax Advice (including, without limitation, by making any new representation or covenant, confirming any previously made representation or covenant or providing any materials or information requested by any Tax Advisor; provided that neither Worthington Steel nor any other member of the Worthington Steel Group shall be required to make or confirm any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control).

(b) Any information or documents provided under this Agreement shall be kept confidential by the Party receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. In addition, in the event that New Worthington determines that the provision of any information or documents to Worthington Steel or any Worthington Steel Affiliate, or Worthington Steel determines that the provision of any information or documents to New Worthington or any New Worthington Affiliate, could be commercially detrimental, violate any Law or agreement or waive any Privilege, the Parties shall use commercially reasonable efforts to permit each other’s compliance with its obligations under this Article VII in a manner that avoids any such harm or consequence.

7.2 Tax Return Information. Each of New Worthington and Worthington Steel, and each member of their respective Groups, acknowledges that time is of the essence in relation to any request for information, assistance or cooperation made pursuant to Section 7.1 of this Agreement or this Section 7.2. Each of New Worthington and Worthington Steel, and each member of their respective Groups, acknowledges that failure to conform to the reasonable deadlines set by the Party making such request could cause irreparable harm. Each Party shall provide to the other Party information and documents relating to its Group reasonably required by the other Party to prepare Tax Returns, including any pro forma returns required by the Responsible Party for purposes of preparing such Tax Returns. Any information or documents the Responsible Party requires to prepare such Tax Returns shall be provided in such form as the Responsible Party reasonably requests and at or prior to the time reasonably specified by the Responsible Party so as to enable the Responsible Party to file such Tax Returns on a timely basis.

 

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7.3 Reliance by New Worthington. If any member of the Worthington Steel Group supplies information to a member of the New Worthington Group in connection with a Tax liability and an officer of a member of the New Worthington Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the New Worthington Group identifying the information being so relied upon, the chief financial officer of Worthington Steel (or any officer of Worthington Steel as designated by the chief financial officer of Worthington Steel) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. Worthington Steel agrees to indemnify and hold harmless each member of the New Worthington Group and its directors, officers and employees from and against any fine, penalty or other cost or expense of any kind attributable to a member of the Worthington Steel Group having supplied, pursuant to this Article VII, a member of the New Worthington Group with inaccurate or incomplete information in connection with a Tax liability.

7.4 Reliance by Worthington Steel. If any member of the New Worthington Group supplies information to a member of the Worthington Steel Group in connection with a Tax liability and an officer of a member of the Worthington Steel Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Worthington Steel Group identifying the information being so relied upon, the chief financial officer of New Worthington (or any officer of New Worthington as designated by the chief financial officer of New Worthington) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. New Worthington agrees to indemnify and hold harmless each member of the Worthington Steel Group and its directors, officers and employees from and against any fine, penalty or other cost or expense of any kind attributable to a member of the New Worthington Group having supplied, pursuant to this Article VII, a member of the Worthington Steel Group with inaccurate or incomplete information in connection with a Tax liability.

7.5 Other Separation Taxes. Worthington Steel shall (and shall cause its Affiliates to) reasonably cooperate with New Worthington to correct any errors in the chronology or completion of any transactions intended to facilitate, or otherwise effectuated in connection with, the Separation, and take any and all commercially reasonable actions requested by New Worthington to minimize any Other Separation Taxes.

 

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ARTICLE VIII.

TAX RECORDS

8.1 Retention of Tax Records. Each of New Worthington and Worthington Steel shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Distribution Periods, and New Worthington shall preserve and keep all other Tax Records relating to Taxes of the New Worthington and Worthington Steel Groups for Pre-Distribution Periods, for so long as the contents thereof may be or become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven (7) years after the Distribution Date (such later date, the “Retention Date”). After the Retention Date, each of New Worthington and Worthington Steel may dispose of such Tax Records upon sixty (60) Business Days’ prior written notice to the other Party. If, prior to the Retention Date, (a) New Worthington or Worthington Steel reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Article VIII are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Party agrees, then such first Party may dispose of such Tax Records upon sixty (60) Business Days’ prior notice to the other Party. Any notice of an intent to dispose given pursuant to this Section 8.1 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Parties shall have the opportunity, at their cost and expense, to copy or remove, within such sixty (60) Business Day period, all or any part of such Tax Records. If, at any time prior to the Retention Date, a Party or any of its Affiliates determines to decommission or otherwise discontinue any computer program or information technology system used to access or store any Tax Records, then such program or system may be decommissioned or discontinued upon ninety (90) Business Days’ prior notice to the other Party and the other Party shall have the opportunity, at its cost and expense, to copy, within such ninety (90) Business Day period, all or any part of the underlying data relating to the Tax Records accessed by or stored on such program or system.

8.2 Access to Tax Records. The Parties and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession pertaining to (i) in the case of any Tax Return of the New Worthington Group, the portion of such return that relates to Taxes for which the Worthington Steel Group may be liable pursuant to this Agreement or (ii) in the case of any Tax Return of the Worthington Steel Group, the portion of such return that relates to Taxes for which the New Worthington Group may be liable pursuant to this Agreement, and shall permit the other Party and its Affiliates, authorized agents and representatives and any representative of a Tax Authority or other Tax auditor direct access, at the cost and expense of the requesting Party, during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Party in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement.

8.3 Preservation of Privilege. The Parties and their respective Affiliates shall not provide access to, copies of, or otherwise disclose to any Person any documentation relating to Taxes existing prior to the Distribution Date to which Privilege may reasonably be asserted without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed.

 

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ARTICLE IX.

TAX CONTESTS

9.1 Notice. Each Party shall provide prompt notice to the other Party of any written communication from a Tax Authority regarding any pending Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware (i) related to Taxes for Tax Periods for which it is indemnified by the other Party hereunder or for which it may be required to indemnify the other Party hereunder, (ii) relating to a Worthington Steel Separate Return that could reasonably be expected to materially adversely affect any member of the New Worthington Group, or (iii) otherwise relating to the Intended Tax Treatment, the Distribution or the Separation (including the resolution of any Tax Contest relating thereto). Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified Party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such Party fails to give the indemnifying Party prompt notice of such asserted Tax liability and the indemnifying Party is entitled under this Agreement to contest the asserted Tax liability, then (x) to the extent the indemnifying Party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying Party shall have no obligation to indemnify the indemnified Party for any Taxes arising out of such asserted Tax liability, and (y) to the extent the indemnifying Party is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a material monetary detriment to the indemnifying Party, then any amount which the indemnifying Party is otherwise required to pay the indemnified Party pursuant to this Agreement shall be reduced by the amount of such detriment.

9.2 Control of Tax Contests.

(a) New Worthington Control. Notwithstanding anything in this Agreement to the contrary, New Worthington shall have the right to control any Tax Contest with respect to any Tax matters relating to (i) a Joint Return, (ii) a New Worthington Separate Return, (iii) the Intended Tax Treatment, (iv) Specified Separation Taxes and (v) Other Separation Taxes. Subject to Section 9.2(c) and Section 9.2(d) of this Agreement, New Worthington shall have absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any such Tax Contest.

(b) Worthington Steel Control. Except as otherwise provided in this Section 9.2, Worthington Steel shall have the right to control any Tax Contest with respect to any Worthington Steel Separate Return. Subject to Section 9.2(c) and Section 9.2(d) of this Agreement, Worthington Steel shall have (i) reasonable discretion, after consultation with New Worthington, with respect to any decisions to be made, or the nature of any action to be taken, with respect to any such Tax Contest relating to a Worthington Steel Separate Return that could reasonably be expected to materially adversely affect any member of the New Worthington Group, and (ii) absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any other such Tax Contest.

 

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(c) Settlement Rights. The Controlling Party shall have the sole right to contest, litigate, compromise and settle any Tax Contest without obtaining the prior consent of the Non-Controlling Party; provided, that to the extent any such Tax Contest (i) could give rise to a claim for indemnity by the Controlling Party or its Affiliates against the Non-Controlling Party or its Affiliates under this Agreement, or (ii) is with respect to a Worthington Steel Separate Return that could reasonably be expected to materially adversely affect any member of the New Worthington Group, then the Controlling Party shall not settle any such Tax Contest without the Non-Controlling Party’s prior written consent (which consent may not be unreasonably withheld, conditioned, or delayed and, in the case of a Tax Contest relating to Specified Separation Taxes, must take into account the reasonable likelihood of success of such Tax Contest on its merits without regard to the ability of Worthington Steel to pay). Subject to Section 9.2(e) of this Agreement, and unless waived by the Parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement: (I) the Controlling Party shall keep the Non-Controlling Party reasonably informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment in such Tax Contest; (II) the Controlling Party shall timely provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (III) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection with such potential adjustment in such Tax Contest; (IV) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest; and (V) the Controlling Party shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party. In the case of any Tax Contest described in this Article IX, “Controlling Party” means the Party entitled to control the Tax Contest under such Section and “Non-Controlling Party” means (x) New Worthington if Worthington Steel is the Controlling Party and (y) Worthington Steel if New Worthington is the Controlling Party.

(d) Tax Contest Participation. Subject to Section 9.2(e) of this Agreement, and unless waived by the Parties in writing, the Controlling Party shall provide the Non-Controlling Party with written notice reasonably in advance of, and the Non-Controlling Party shall have the right to attend, any formally scheduled meetings with Tax Authorities or hearings or proceedings before any judicial authorities in connection with any potential adjustment in a Tax Contest (i) pursuant to which the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement or (ii) that is with respect to a Worthington Steel Separate Return that could reasonably be expected to materially adversely affect any member of the New Worthington Group. The failure of the Controlling Party to provide any notice specified in this Section 9.2(d) to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party.

 

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(e) Joint Returns. Notwithstanding anything in this Article IX to the contrary, in the case of a Tax Contest related to a Joint Return, the rights of Worthington Steel and its Affiliates under Section 9.2(c) and Section 9.2(d) of this Agreement shall be limited in scope to the portion of such Tax Contest relating to Taxes for which Worthington Steel may reasonably be expected to become liable to make any indemnification payment to New Worthington under this Agreement.

(f) Power of Attorney. Each member of the Worthington Steel Group shall execute and deliver to New Worthington (or such member of the New Worthington Group as New Worthington shall designate) any power of attorney or other similar document reasonably requested by New Worthington (or such designee) in connection with any Tax Contest (as to which New Worthington is the Controlling Party) described in this Article IX. Each member of the New Worthington Group shall execute and deliver to Worthington Steel (or such member of the Worthington Steel Group as Worthington Steel shall designate) any power of attorney or other similar document reasonably requested by Worthington Steel (or such designee) in connection with any Tax Contest (as to which Worthington Steel is the Controlling Party) described in this Article IX.

ARTICLE X.

SURVIVAL OF OBLIGATIONS

The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

ARTICLE XI.

TAX TREATMENT OF PAYMENTS

11.1 General Rule. Unless otherwise required by applicable Law, the Parties will treat any indemnity payment made pursuant to this Agreement or any Ancillary Agreement by New Worthington to Worthington Steel, or vice versa, in the same manner as if such payment were a non-taxable distribution or capital contribution, as the case may be, made immediately prior to the Distribution, except to the extent that New Worthington and Worthington Steel treat a payment as the settlement of an intercompany liability; provided, however, that any such payment that is made or received by a Person other than New Worthington or Worthington Steel, as the case may be, shall be treated as if made or received by the payor or the recipient as agent for New Worthington or Worthington Steel, in each case as appropriate.

11.2 Interest. Anything herein or in the Separation Agreement to the contrary notwithstanding, to the extent one Party makes a payment of interest to the other Party under this Agreement with respect to the period from the date that the Party receiving the interest payment made a payment of Tax to a Tax Authority to the date that the Party making the interest payment reimbursed the Party receiving the interest payment for such Tax payment, the interest payment shall be treated as interest expense to the Party making such payment (deductible to the extent provided by Law) and as interest income by the Party receiving such payment (includible in income to the extent provided by Law). The amount of the payment shall not be adjusted to take into account any associated Tax Benefit to the Party making such payment or increase in Tax to the Party receiving such payment.

 

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ARTICLE XII.

GROSS-UP OF INDEMNIFICATION PAYMENTS

Except to the extent provided in Article XI, any Tax indemnity payment made by a Party under this Agreement shall be increased as necessary so that after making all payments in respect to Taxes imposed on or attributable to such indemnity payment, the recipient Party receives an amount equal to the sum it would have received had no such Taxes been imposed.

ARTICLE XIII.

MISCELLANEOUS

13.1 Counterparts; Entire Agreement; Corporate Power.

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to each other Party. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile, electronic mail (including .pdf, DocuSign or other electronic signature) or other transmission method shall be deemed to have been duly and validly delivered and shall be sufficient to bind the parties to the terms and conditions of this Agreement.

(b) This Agreement and the Separation Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments, and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein. With respect to the subject matter of this Agreement, in the event of a conflict between this Agreement and the Separation Agreement or any other Ancillary Agreement, this Agreement shall control.

(c) Each Party represents on behalf of itself and each other member of its Group as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes or will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof.

13.2 Governing Law. This Agreement (and any claims or Disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Ohio, irrespective of the choice of laws principles of the State of Ohio, including all matters of validity, construction, effect, enforceability, performance, and remedies.

 

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13.3 Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that neither Party may assign or otherwise transfer its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party or other parties thereto, as applicable.

13.4 Third Party Beneficiaries. Except for the provisions of Section 5.1(d) of the Separation Agreement as to directors and officers of the New Worthington Group and the Worthington Steel Group: (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including, without limitation, any shareholders of a Party) except the Parties hereto any rights or remedies hereunder; there are no third-party beneficiaries of this Agreement, and (b) neither this Agreement, the Separation Agreement, nor any other Ancillary Agreement shall provide any third Person (including, without limitation, any shareholders of the Parties) with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

13.5 Notices. All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email with receipt confirmed, or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 13.5). If to New Worthington, to:

Worthington Industries, Inc.

200 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Patrick Kennedy, General Counsel

Email: Patrick.kennedy@worthingtonindustries.com

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

330 North Wabash Avenue, Suite 2800

Chicago, IL 60611

Attention: Cathy Birkeland; Christopher Drewry

Email: cathy.birkeland@lw.com; christopher.drewry@lw.com

If to Worthington Steel, to:

Worthington Steel, Inc.

100 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Michaune Tillman, General Counsel

Email: Michaune.tillman@worthingtonindustries.com

 

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Either Party may, by notice to the other Party, change the address and contact person to which any such notices are to be given.

13.6 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

13.7 Force Majeure. No Party shall be deemed in default of this Agreement or, unless otherwise provided therein, the Separation Agreement or any other Ancillary Agreement for any delay or failure to fulfill any obligation, other than a delay or failure to make a payment, so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement, the Separation Agreement and the other Ancillary Agreements, as applicable, as soon as reasonably practicable.

13.8 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

13.9 Survival of Covenants. Except as expressly set forth in this Agreement, the Separation Agreement, or any other Ancillary Agreement, the covenants, representations and warranties contained in this Agreement, and liability for the breach of any obligations contained herein or therein, shall survive the Separation and shall remain in full force and effect in accordance with their terms.

13.10 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

13.11 Dispute Resolution. Any and all disputes, controversies and claims arising hereunder, including with respect to the validity, interpretation, performance, breach or termination of this Agreement shall be resolved through the procedures provided in Article IV of the Separation Agreement.

 

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13.12 Amendments.

No provisions of this Agreement, the Separation Agreement or any other Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced; provided, at any time prior to the Effective Time, the terms and conditions of this Agreement, including terms relating to the Separation and the Distribution, may be amended, modified or abandoned by and in the sole and absolute discretion of the Board of Directors of New Worthington without the approval of any Person, including Worthington Steel or New Worthington.

13.13 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement or the Separation Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

13.14 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any subsidiary or affiliate of such Party.

13.15 Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a shareholder, director, employee, officer, agent or representative of New Worthington or Worthington Steel, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of New Worthington or Worthington Steel, as applicable, under this Agreement, the Separation Agreement or any other Ancillary Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of New Worthington or Worthington Steel, for itself and its respective Subsidiaries and its and their respective shareholders, directors, employees and officers, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.

13.16 Limitations of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT, THE SEPARATION AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT TO THE CONTRARY, NEITHER WORTHINGTON STEEL NOR ITS AFFILIATES, ON THE ONE HAND, NOR NEW WORTHINGTON NOR ITS AFFILIATES, ON THE OTHER HAND, SHALL BE LIABLE UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE OTHER FOR ANY INCIDENTAL CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR

 

30


DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO INDEMNIFICATION OF SUCH DAMAGES, INCLUDING ALL COSTS, EXPENSES, INTEREST, ATTORNEYS’ FEES, DISBURSEMENTS AND EXPENSES OF COUNSEL, EXPERT AND CONSULTING FEES AND COSTS RELATED THERETO OR TO THE INVESTIGATION OR DEFENSE THEREOF, PAID BY AN INDEMNITEE IN RESPECT OF A THIRD-PARTY CLAIM)

[Signature Page to Follow.]

 

31


IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

WORTHINGTON INDUSTRIES, INC.
By:  

/s/ Joseph B. Hayek

Name:   Joseph B. Hayek
Title:   Vice President
WORTHINGTON STEEL, INC.
By:  

/s/ Timothy A. Adams

Name:   Timothy A. Adams
Title:   Vice President

[Signature Page to Tax Matters Agreement]

Exhibit 10.3

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN

WORTHINGTON INDUSTRIES, INC.

AND

WORTHINGTON STEEL, INC.

DATED AS OF NOVEMBER 30, 2023

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I. DEFINITIONS AND INTERPRETATION

     1  

1.1

  General      1  

1.2

  References; Interpretation      8  

ARTICLE II. GENERAL PRINCIPLES

     9  

2.1

  Nature of Liabilities      9  

2.2

  Transfers of Employees and Independent Contractors Generally      9  

2.3

  Assumption and Retention of Liabilities Generally      10  

2.4

  Participation in New Worthington Benefit Arrangements      11  

2.5

  Service Recognition      11  

2.6

  Information and Consultation      11  

2.7

  WARN      11  

ARTICLE III. CERTAIN BENEFIT PLAN PROVISIONS

     12  

3.1

  Welfare Plans      12  

3.2

  401(k) Plan      13  

3.3

  Deferred Compensation Plans      13  

3.4

  Chargeback of Certain Costs      15  

ARTICLE IV. EQUITY INCENTIVE AWARDS

     15  

4.1

  Treatment of New Worthington Options      15  

4.2

  Treatment of New Worthington Restricted Stock Awards      16  

4.3

  Treatment of New Worthington Performance Awards      17  

4.4

  Worthington Steel Stock Plan      20  

4.5

  General Terms      20  

ARTICLE V. ADDITIONAL MATTERS

     21  

5.1

  Cash Incentive Programs      21  

5.2

  Time-Off Benefits      21  

5.3

  Workers’ Compensation Liabilities      22  

5.4

  COBRA Compliance      22  

5.5

  Code Section 409A      23  

5.6

  Payroll Taxes and Reporting      23  

5.7

  Regulatory Filings      23  

5.8

  Disability      23  

5.9

  Certain Requirements      23  

ARTICLE VI. GENERAL AND ADMINISTRATIVE

     23  

 

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6.1

  Employer Rights      23  

6.2

  Effect on Employment      24  

6.3

  Consent of Third Parties      24  

6.4

  Access to Employees      24  

6.5

  Beneficiary Designation/Release of Information/Right to Reimbursement      24  

6.6

  No Third Party Beneficiaries      24  

6.7

  No Duplication or Acceleration of Benefits      25  

6.8

  Employee Benefits Administration      25  

ARTICLE VII. MISCELLANEOUS

     25  

7.1

  Counterparts; Entire Agreement; Corporate Power      25  

7.2

  Governing Law      26  

7.3

  Assignability      26  

7.4

  Third-Party Beneficiaries      26  

7.5

  Notices      26  

7.6

  Severability      27  

7.7

  Force Majeure      27  

7.8

  Headings      27  

7.9

  Survival of Covenants      28  

7.10

  Waivers of Default      28  

7.11

  Dispute Resolution      28  

7.12

  Amendments      28  

7.13

  Construction      28  

7.14

  Performance      28  

7.15

  Limited Liability      29  

7.16

  Exclusivity of Tax Matters      29  

7.17

  Limitations of Liability      29  

Exhibits

Exhibit A            New Worthington Performance Awards - Calculation Methodology

 

-ii-


EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of November 30, 2023, is entered into by and between Worthington Industries, Inc., an Ohio corporation (“New Worthington”), and Worthington Steel, Inc., an Ohio corporation and wholly owned subsidiary of New Worthington (“Worthington Steel”). “Party” or “Parties” means New Worthington or Worthington Steel, individually or collectively, as the case may be. Capitalized terms used in this Agreement shall have the meanings set forth in Section 1.1.

RECITALS

WHEREAS, New Worthington, acting together with its Subsidiaries, currently conducts the New Worthington Business and the Worthington Steel Business;

WHEREAS, New Worthington and Worthington Steel have entered into that certain Separation and Distribution Agreement dated as of November 30, 2023 (as amended, restated, amended and restated and otherwise modified from time to time, the “Separation Agreement”) pursuant to which Worthington Steel will separate from the rest of New Worthington and be established as a separate, publicly traded company to operate the Worthington Steel Business;

WHEREAS, the Separation Agreement sets forth the terms and conditions applicable to the Distribution;

WHEREAS, pursuant to the Separation Agreement, New Worthington and Worthington Steel have agreed to enter into this Agreement for the purpose of allocating Assets, Liabilities and responsibilities with respect to certain employee matters and employee compensation and benefit plans and programs between them and to address certain other employment-related matters.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants and agreements contained in this Agreement and in the Separation Agreement, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS AND INTERPRETATION

1.1 General. As used in this Agreement, the following terms shall have the following meanings:

Accrued Incentive Amount” shall mean the aggregate amount accrued by New Worthington in respect of Worthington Steel Employees under any New Worthington cash incentive compensation and sales commission plans and programs (including, without limitation, the New Worthington AIP) applicable to such Worthington Steel Employees and unpaid as of the date on which the employment or services of such Worthington Steel Employees are transferred to the Worthington Steel Group.

Affiliate” shall have the meaning ascribed to it in the Separation Agreement.

Agreement” shall have the meaning set forth in the Preamble.

 

1


Ancillary Agreement” shall have the meaning ascribed to it in the Separation Agreement.

Assets” shall have the meaning ascribed to it in the Separation Agreement.

Benefit Arrangement” shall mean, with respect to an entity, each compensation or employee benefit plan, program, policy, agreement or other arrangement, whether or not “employee benefit plans” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), including any Welfare Plan and any other benefit plan, program, policy, agreement or arrangement providing cash- or equity-based compensation or incentives, vacation, paid or unpaid leave, severance, retention, change in control, termination, deferred compensation, individual employment or consulting, supplemental income, retiree benefit or other fringe benefit (whether or not taxable), or employee loans, that are sponsored or maintained by such entity (or to which such entity contributes or is required to contribute or in which it participates), and excluding workers’ compensation plans, policies, programs and arrangements.

Business Day” shall have the meaning ascribed to it in the Separation Agreement.

COBRA” shall mean Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA, or similar state Law.

Code” means the Internal Revenue Code of 1986, as amended.

Compensation Committee” shall mean the Compensation Committee of the New Worthington Board.

Delayed Transfer Date” shall mean the date on which it is determined by New Worthington that either (i) a Delayed Transfer Worthington Steel Employee or Delayed Transfer New Worthington Employee is permitted to transfer from the New Worthington Group to the Worthington Steel Group or from the Worthington Steel Group to the New Worthington Group, respectively, in accordance with applicable Law, or (ii) the necessary business operations are set up in the relevant jurisdiction to enable employment of the Worthington Steel Employee or New Worthington Employee by the Worthington Steel Group or New Worthington Group, as applicable.

Delayed Transfer Worthington Steel Employee” shall mean any Worthington Steel Employee whose employment is determined by New Worthington to not be eligible to be transferred to a member of the Worthington Steel Group at or prior to the Effective Time as a result of (i) requirements under applicable Law, (ii) participation in a long-term disability plan or similar arrangement or (iii) a delay in setting up Worthington Steel Business operations in a particular jurisdiction sufficient to employ such Worthington Steel Employee.

Delayed Transfer New Worthington Employee” shall mean any New Worthington Employee whose employment is determined by New Worthington to not be eligible to be transferred from a member of the Worthington Steel Group to a member of the New Worthington Group at or prior to the Effective Time as a result of (i) requirements under applicable Law, (ii) participation in a long-term disability plan or similar arrangement or (iii) a delay in setting up New Worthington Retained Business operations in a particular jurisdiction sufficient to employ such New Worthington Employee.

 

2


Dispute” shall have the meaning ascribed to it in the Separation Agreement.

Distribution” shall have the meaning ascribed to it in the Separation Agreement.

Distribution Date” shall have the meaning ascribed to it in the Separation Agreement.

Effective Time” shall have the meaning ascribed to it in the Separation Agreement.

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

Force Majeure” shall have the meaning ascribed to it in the Separation Agreement.

Former New Worthington Employee” shall mean any individual who would have qualified as a New Worthington Employee, but for the fact that such individual’s employment or service with New Worthington or any of its Subsidiaries or Affiliates terminated for any reason prior to the Effective Time.

Former Worthington Steel Service Provider” shall mean any individual who would have qualified as a Worthington Steel Employee or Worthington Steel Independent Contractor, but for the fact that such individual’s employment or service with New Worthington or any of its Subsidiaries or Affiliates terminated for any reason prior to the date on which such individual’s employment or service would otherwise have transferred to Worthington Steel pursuant to this Agreement and provided that such individual’s most recent employment or service had been performed in the Worthington Steel Business.

HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.

Law” shall have the meaning ascribed to it in the Separation Agreement.

Liabilities” shall have the meaning ascribed to it in the Separation Agreement.

New Worthington” shall have the meaning set forth in the Preamble.

New Worthington 401(k) Plan” shall mean the Worthington Industries, Inc. Deferred Profit Sharing Plan, as amended.

New Worthington AIP” shall mean the Worthington Industries, Inc. Annual Incentive Plan for Executives, effective as of September 24, 2008.

 

3


New Worthington Benefit Arrangement” shall mean any Benefit Arrangement, including a New Worthington Welfare Plan, sponsored, maintained or contributed to by any member of the New Worthington Group.

New Worthington Board” shall mean the Board of Directors of New Worthington as set forth in the Recitals.

New Worthington Cafeteria Plan” shall mean a “cafeteria plan” (within the meaning of Section 125 of the Code), including any health flexible spending account or dependent care plan, maintained by any member of the New Worthington Group.

New Worthington Cash Incentive Programs” shall have the meaning set forth in Section 5.1.

New Worthington Common Stock” shall mean the common shares of New Worthington, without par value.

New Worthington DCP” shall mean the Worthington Industries, Inc. Amended and Restated 2005 Non-Qualified Deferred Compensation Plan, as amended.

New Worthington Director DCP” shall mean the Worthington Industries, Inc. Amended and Restated 2005 Deferred Compensation Plan for Directors, as amended.

New Worthington Employee” shall mean each employee of New Worthington or any of its Subsidiaries or Affiliates who does not qualify as a Worthington Steel Employee.

New Worthington Employee Stock Purchase Plan” shall mean the Worthington Industries, Inc. Employee Stock Purchase Plan.

New Worthington Group” shall have the meaning ascribed to it in the Separation Agreement.

New Worthington Indemnitees” shall have the meaning ascribed to it in the Separation Agreement.

New Worthington Non-Employee Director” shall mean each non-employee member of the New Worthington Board (which, for the avoidance of doubt, shall also include any non-employee member of the New Worthington Board who also serves as member of the board of directors of Worthington Steel).

New Worthington Non-Retirement Eligible Holder” shall mean a New Worthington Employee who is not a New Worthington Retirement Eligible Holder.

New Worthington Option” shall mean an option to purchase shares of New Worthington Common Stock granted pursuant to a New Worthington Stock Plan.

New Worthington Performance Award” shall mean an award granted by New Worthington pursuant to a New Worthington Stock Plan that was denominated as a “Performance Share and Performance Cash Award” under the terms of such plan and the related award agreement, and that vests based on achievement of specified financial performance targets.

 

4


New Worthington Post-Separation Stock Value” shall mean the closing price per share of New Worthington Common Stock trading regular way on the Distribution Date.

New Worthington Pre-2005 DCP” shall mean the Worthington Industries, Inc. Amended and Restated Non-Qualified Deferred Compensation Plan, as amended.

New Worthington Pre-Separation Stock Value” mean the closing price per share of New Worthington Common Stock trading “regular way with due bills” on the last trading day immediately preceding to the Distribution Date.

New Worthington Ratio” shall mean the quotient obtained by dividing the New Worthington Pre-Separation Stock Value by the New Worthington Post-Separation Stock Value.

New Worthington Restricted Stock Award” shall mean an award granted by New Worthington pursuant to a New Worthington Stock Plan that was denominated as “Restricted Stock” under the terms of such plan and the related award agreement, and vests solely based on the continued employment or service of the recipient.

New Worthington Retained Business” shall have the meaning ascribed to “New Worthington Business” in the Separation Agreement.

New Worthington Retained Liabilities” shall have the meaning ascribed to “New Worthington Liabilities” in the Separation Agreement.

New Worthington Retirement Eligible Holder” shall mean a New Worthington Employee who, with respect to a given New Worthington Performance Award, has satisfied or would during the applicable performance period would satisfy, the eligibility conditions for retirement under New Worthington’s generally applicable retirement policies or practices, generally at least age 55 with at least 5 years of service and a combined age plus years of service of at least 65.

New Worthington Stock Plans” shall mean, collectively, the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan, as amended, the Worthington Industries, Inc. 2010 Stock Option Plan, as amended, and the Worthington Industries, Inc. Amended and Restated 2006 Equity Incentive Plan for Non-Employee Directors, as amended, as applicable.

New Worthington Welfare Plan” shall mean any Welfare Plan sponsored and maintained by New Worthington or any member of the New Worthington Group.

Party” and “Parties” shall have the meanings set forth in the Preamble.

Person” shall have the meaning ascribed to it in the Separation Agreement.

 

5


Plan Transition Date” shall mean the date, as applicable to each New Worthington Benefit Arrangement, that is either (i) the Distribution Date or (ii) such other date as may be agreed between the Parties, including pursuant to the Transition Services Agreement. For purposes of clarity, the Plan Transition Date may vary for each New Worthington Benefit Arrangement.

Separation” shall have the meaning ascribed to it in the Separation Agreement.

Separation Agreement” shall have the meaning set forth in the Recitals.

Subsidiary” shall have the meaning ascribed to it in the Separation Agreement.

Tax” shall have the meaning ascribed to it in the Separation Agreement.

Tax Matters Agreement” shall have the meaning ascribed to it in the Separation Agreement.

Transition Services Agreement” shall have the meaning ascribed to it in the Separation Agreement.

Welfare Plan” shall mean, where applicable, a “welfare plan” (as defined in Section 3(1) of ERISA and in 29 C.F.R. §2510.3-1) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision and mental health and substance use disorder), disability benefits, or life, accidental death and disability, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, contribution funding toward a health savings account, flexible spending accounts, tuition reimbursement or adoption assistance programs or cashable credits.

Worthington Steel” shall have the meaning set forth in the Preamble.

Worthington Steel 401(k) Plan” shall mean the Worthington Steel, Inc. 401(k) Retirement Plan.

Worthington Steel Benefit Arrangement” shall mean any Benefit Arrangement, including a Worthington Steel Welfare Plan, sponsored, maintained or contributed to exclusively by any member of the Worthington Steel Group.

Worthington Steel Business” shall have the meaning ascribed to it in the Separation Agreement.

Worthington Steel Cafeteria Plan” shall mean a “cafeteria plan” (within the meaning of Section 125 of the Code), including any health flexible spending account or dependent care plan, maintained by any member of the Worthington Steel Group.

Worthington Steel Cash Incentive Programs” shall have the meaning set forth in Section 5.1.

 

6


Worthington Steel Common Stock” shall mean the common shares of Worthington Steel.

Worthington Steel DCP” shall mean the Worthington Steel, Inc. Non-Qualified Deferred Compensation Plan, effective as of December 1, 2023.

Worthington Steel Director DCP” shall mean the Worthington Steel, Inc. Deferred Compensation Plan for Directors, effective as of December 1, 2023.

Worthington Steel Employee” shall mean each individual who is employed by (i) Worthington Steel or any of its Subsidiaries or Affiliates (excluding the New Worthington Group) as of the Effective Time, and (ii) New Worthington or any of its Subsidiaries or Affiliates (excluding the Worthington Steel Group) as of the date on which New Worthington determines to transfer the employment of applicable individuals to Worthington Steel or any of its Subsidiaries or Affiliates and who New Worthington determines as of such date is either (A) exclusively or primarily engaged in the Worthington Steel Business or (B) necessary for the ongoing operation of the Worthington Steel Business following the Effective Time, in each case regardless of whether any such employee is actively at work or is not actively at work as a result of disability or illness, an approved leave of absence (including military leave with reemployment rights under federal Law and leave under the Family and Medical Leave Act of 1993), vacation, personal day or similar short- or long-term absence.

Worthington Steel Group” shall have the meaning ascribed to it in the Separation Agreement.

Worthington Steel Indemnitees” shall have the meaning ascribed to it in the Separation Agreement.

Worthington Steel Independent Contractor” shall mean each individual who is engaged as an independent contractor or on any other non-employee basis by New Worthington or any of its Subsidiaries or Affiliates as of the date on which New Worthington determines to transfer the contracts of service of applicable individuals to Worthington Steel and who New Worthington determines as of such date is either (i) exclusively or primarily engaged in the Worthington Steel Business or (ii) necessary for the ongoing operation of the Worthington Steel Business following the Effective Time. For the avoidance of doubt, “Worthington Steel Independent Contractor” shall not include any New Worthington Non-Employee Director.

Worthington Steel Liabilities” shall have the meaning ascribed to it in the Separation Agreement.

Worthington Steel Non-Employee Director” shall mean each non-employee member of the board of directors of Worthington Steel who is not a New Worthington Non-Employee Director immediately after the Effective Time.

Worthington Steel Non-Retirement Eligible Holder” shall mean a Worthington Steel Employee or Worthington Steel Independent Contractor who is not a Worthington Steel Retirement Eligible Holder.

 

7


Worthington Steel Option” shall have the meaning set forth in Section 4.1.

Worthington Steel Performance Award” shall have the meaning set forth in Section 4.2.

Worthington Steel Ratio” shall mean the quotient obtained by dividing the New Worthington Pre-Separation Stock Value by the Worthington Steel Stock Value.

Worthington Steel Restricted Stock Award” shall have the meaning set forth in Section 4.2.

Worthington Steel Retirement Eligible Holder” shall mean a Worthington Steel Employee or Worthington Steel Independent Contractor who, with respect to a given New Worthington Performance Award, has satisfied or would during the applicable performance period would satisfy, the eligibility conditions for retirement under New Worthington’s generally applicable retirement policies or practices generally at least age 55 with at least 5 years of service and a combined age plus years of service of at least 65.

Worthington Steel Stock Plan” shall mean, collectively, the Worthington Steel, Inc. 2023 Long-Term Incentive Plan and the Worthington Steel, Inc. 2023 Equity Incentive Plan for Non-Employee Directors.

Worthington Steel Stock Value” shall mean the closing price per share of Worthington Steel Common Stock trading regular way on the Distribution Date.

Worthington Steel Welfare Plan” shall mean any Welfare Plan sponsored and maintained by Worthington Steel or any member of the Worthington Steel Group.

1.2 References; Interpretation. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. The words “written request” when used in this Agreement shall include email. Reference in this Agreement to any time shall be to New York City, New York time unless otherwise expressly provided herein. Unless the context requires otherwise, references in this Agreement to “New Worthington” shall also be deemed to refer to the applicable member of the New Worthington Group, references to “Worthington Steel” shall also be deemed to refer to the applicable member of the Worthington Steel Group and, in connection therewith, any references to actions or omissions to be taken, or refrained from being taken, as the case may be, by New Worthington or Worthington Steel shall be deemed to require New Worthington or Worthington Steel, as the case may be, to cause the applicable members of the New Worthington Group or the Worthington Steel Group, respectively, to take, or refrain from taking, any such action. In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the definitions set forth in Section 1.1, for the purpose of determining what is and is not included in such definitions, any item explicitly included on a Schedule referred to in any such definition shall take priority over any provision of the text thereof.

 

8


ARTICLE II.

GENERAL PRINCIPLES

2.1 Nature of Liabilities. All Liabilities assumed or retained by a member of the New Worthington Group under this Agreement shall be New Worthington Retained Liabilities. All Liabilities assumed or retained by a member of the Worthington Steel Group under this Agreement shall be Worthington Steel Liabilities.

2.2 Transfers of Employees and Independent Contractors Generally.

(a) Immediately after the Effective Time, by virtue of this Agreement and without further action by any Person, (i) each New Worthington Employee shall continue to be employed or engaged at New Worthington or such other member of the New Worthington Group as employs or engages such New Worthington Employee as of immediately prior to the Effective Time, and (ii) each Worthington Steel Employee shall continue to be employed or engaged at Worthington Steel or such other member of the Worthington Steel Group as employs or engages such Worthington Steel Employee as of immediately prior to the Effective Time. The Parties shall cooperate to effectuate any transfers of employment contemplated by this Agreement, including transfers necessary to ensure that all New Worthington Employees are employed or engaged at a member of the New Worthington Group and all Worthington Steel Employees are employed or engaged at a member of the Worthington Steel Group, in each case, as of immediately prior to the Effective Time.

(b) The Parties acknowledge and agree that (i) neither the Distribution nor any other transaction contemplated by the Separation Agreement or this Agreement shall constitute or be deemed to constitute a “change in control” or similar corporate transaction impacting the vesting or payment of any amounts or benefits for purposes of any New Worthington Benefit Arrangement, or Worthington Steel Benefit Arrangement, and (ii) no New Worthington Employee or Worthington Steel Employee shall (A) terminate or be deemed to terminate employment or service solely by virtue of the consummation of the Distribution, any transfer of employment or other service relationship contemplated hereby, or any related transactions or events contemplated by the Separation Agreement or this Agreement, or (B) become entitled to any severance, termination, separation or similar rights, payments or benefits, whether under any Benefit Arrangement or otherwise, in connection with any of the foregoing.

(c) The New Worthington Group and Worthington Steel Group agree to execute, and to seek to have the applicable Worthington Steel Employees execute, such documentation, if any, as may be necessary to reflect the transfer of employment described in this Section 2.2.

 

9


2.3 Assumption and Retention of Liabilities Generally.

(a) From and after the Effective Time, except to the extent such Liabilities become Liabilities of Worthington Steel pursuant to Section 2.3(b), New Worthington shall, or shall cause one or more members of the New Worthington Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill (i) all Liabilities under all New Worthington Benefit Arrangements, whenever incurred; (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all current and former New Worthington Employees and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred; and (iii) all other Liabilities or obligations expressly assigned to or assumed by a member of the New Worthington Group under this Agreement.

(b) From and after the Effective Time, Worthington Steel shall, or shall cause one or more members of the Worthington Steel Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill (i) all Liabilities under all Worthington Steel Benefit Arrangements, whenever incurred; (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all Worthington Steel Employees, Former Worthington Steel Service Providers and Worthington Steel Independent Contractors and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred; and (iii) all other Liabilities or obligations expressly assigned to or assumed by a member of the Worthington Steel Group under this Agreement.

(c) The Parties shall promptly reimburse one another, upon reasonable request of the Party requesting reimbursement and the presentation by such Party of such substantiating documentation as the other Party shall reasonably request, for the cost of any obligations or Liabilities satisfied or assumed by the Party requesting reimbursement or its Affiliates that are, or that have been made pursuant to this Agreement, the responsibility of the other Party or any of its Affiliates.

(d) Notwithstanding that a Delayed Transfer Worthington Steel Employee or Delayed Transfer New Worthington Employee shall not become employed by a member of the Worthington Steel Group or New Worthington Group, respectively, until the Delayed Transfer Date applicable to such employee, (i) Worthington Steel or New Worthington shall be responsible for, and shall timely reimburse the other for, all Liabilities incurred by New Worthington or Worthington Steel, respectively, with regard to each such Delayed Transfer Worthington Steel Employee or Delayed Transfer New Worthington Employee from the Effective Time to the Delayed Transfer Date applicable to such employee and (ii) the Parties shall use their reasonable efforts to effect the provisions of this Agreement with respect to the compensation and benefits of such Delayed Transfer Worthington Steel Employees and Delayed Transfer New Worthington Employees following the Delayed Transfer Date applicable to such employee, it being understood that it may not be possible to replicate the effect of such provisions under such circumstances.

(e) Notwithstanding any provision of this Agreement or the Separation Agreement to the contrary, Worthington Steel shall, or shall cause one or more members of the Worthington Steel Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill all Liabilities that have been accepted, assumed or retained under this Agreement irrespective of whether accruals for such Liabilities have been transferred to Worthington Steel or a member of the Worthington Steel Group or included on a combined balance sheet of the Worthington Steel Business or whether any such accruals are sufficient to cover such Liabilities.

 

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2.4 Participation in New Worthington Benefit Arrangements. Except as provided in this Agreement or the Transition Services Agreement, effective no later than the Plan Transition Date, (i) Worthington Steel and each member of the Worthington Steel Group, to the extent applicable, shall cease to be a participating company in each New Worthington Benefit Arrangement, and (ii) each Worthington Steel Employee shall cease to participate in, be covered by, accrue benefits under, be eligible to contribute to or have any rights under each New Worthington Benefit Arrangement (except to the extent of previously accrued obligations that remain a Liability of any member of the New Worthington Group pursuant to this Agreement).

2.5 Service Recognition. With respect to each individual who, as of the Effective Time, is a Worthington Steel Employee:

(a) From and after the Effective Time, or if earlier and as applicable, the Plan Transition Date, and in addition to any applicable obligations under applicable Law, Worthington Steel shall, and shall cause each member of the Worthington Steel Group to, give such Worthington Steel Employee full credit for purposes of eligibility, vesting, and determination of level of benefits under each Worthington Steel Benefit Arrangement for such Worthington Steel Employee’s prior service with any member of the New Worthington Group or Worthington Steel Group or any predecessor thereto, to the same extent such service was recognized by the applicable New Worthington Benefit Arrangement; provided, that, such service shall not be recognized to the extent it would result in the duplication of benefits.

(b) Except to the extent prohibited by applicable Law, as soon as administratively practicable on or after the Plan Transition Date: (i) Worthington Steel shall waive or cause to be waived all limitations as to preexisting conditions or waiting periods with respect to participation and coverage requirements applicable to such Worthington Steel Employee under each Worthington Steel Welfare Plan in which Worthington Steel Employees participate (or are eligible to participate) to the same extent that such conditions and waiting periods were satisfied or waived under an analogous New Worthington Welfare Plan, and (ii) Worthington Steel shall provide or cause such Worthington Steel Employee to be provided with credit for any co-payments, deductibles or other out-of-pocket amounts paid during the plan year in which the Worthington Steel Employees become eligible to participate in the Worthington Steel Welfare Plans in satisfying any applicable co-payments, deductibles or other out-of-pocket requirements under any such plans for such plan year.

2.6 Information and Consultation. The Parties shall comply with all requirements and obligations to inform, consult or otherwise notify any Worthington Steel Employees or New Worthington Employees in relation to the transactions contemplated by this Agreement and the Separation Agreement, whether required pursuant to any collective bargaining agreement or applicable Law.

2.7 WARN. Notwithstanding anything set forth in this Agreement to the contrary, none of the transactions contemplated by or undertaken by this Agreement is intended to and shall not constitute or give rise to an “employment loss” or employment separation within the meaning of the federal Worker Adjustment and Retraining Notification (WARN) Act, or any other federal, state, or local Law regarding plant closings, mass layoffs, or other employment separations.

 

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ARTICLE III.

CERTAIN BENEFIT PLAN PROVISIONS

3.1 Welfare Plans.

(a) (i) Effective as of the Plan Transition Date, the participation of each Worthington Steel Employee who is a participant in a New Worthington Welfare Plan shall automatically cease and (ii) New Worthington shall cause a member of the Worthington Steel Group (A) to have in effect, no later than the Plan Transition Date, Worthington Steel Welfare Plans providing health and welfare benefits for the benefit of each Worthington Steel Employee with terms that are substantially similar to those provided by the applicable New Worthington Welfare Plan to the applicable Worthington Steel Employee immediately prior to the date on which such Worthington Steel Welfare Plans become effective; and (B) effective on and after the date of cessation described in subsection (i) above, to fully perform, pay and discharge all claims of Worthington Steel Employees or Former Worthington Steel Service Providers, including but not limited to any claims incurred under any New Worthington Welfare Plan on or prior to the date on which such Worthington Steel Welfare Plans become effective, that remain unpaid as of the date on which such Worthington Steel Welfare Plans become effective, regardless of whether any such claim was presented for payment prior to, on or after such date.

(b) Notwithstanding anything to the contrary in this Section 3.1, to the extent any Worthington Steel Employee is, as of the Plan Transition Date, receiving payments as part of any short-term disability program that is part of any New Worthington Welfare Plan, such Worthington Steel Employee’s rights to continued short-term disability benefits (i) will end under the New Worthington Welfare Plan as of the Plan Transition Date; and (ii) all remaining rights will be recognized under the comparable Worthington Steel Welfare Plan as of the Plan Transition Date, and the remainder (if any) of such Worthington Steel Employee’s short-term disability benefits will be paid by the Worthington Steel Welfare Plan. To the extent such Worthington Steel Employee who is on short-term disability as of the Plan Transition Date under the New Worthington Welfare Plan and who subsequently qualifies for long-term disability benefits, such Worthington Steel Employee shall receive long-term disability benefits from the New Worthington Welfare Plan instead of from the Worthington Steel Welfare Plan; provided, however, that all other welfare benefits for such disabled Worthington Steel Employee shall be provided by the Worthington Steel Welfare Plan.

(c) As soon as practicable following the Distribution Date and if and to the extent not effected prior to the Distribution Date, New Worthington (acting directly or through any other member of the New Worthington Group) shall, in accordance with Revenue Ruling 2002-32, cause the portion of the New Worthington Cafeteria Plan applicable to the Worthington Steel Employees to be segregated into a separate component and the account balances in such component to be transferred to the Worthington Steel Cafeteria Plan, which will include any health flexible spending account and dependent care plan. The Worthington Steel Cafeteria Plan shall reimburse New Worthington or the New Worthington Cafeteria Plan to the extent amounts were paid by the New Worthington Cafeteria Plan and not collected from the applicable Worthington Steel Employee and such amounts are subsequently collected by the Worthington Steel Cafeteria Plan with respect to such Worthington Steel Employee.

 

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3.2 401(k) Plan.

(a) (i) Effective as of the Plan Transition Date, New Worthington and Worthington Steel shall cause Worthington Steel to have in effect the Worthington Steel 401(k) Plan, and related trust that satisfy the requirements of Sections 401(a), 401(k) and 501(a) of the Code, with terms that are substantially similar to those provided by the New Worthington 401(k) Plan immediately prior to the date on which such Worthington Steel 401(k) Plan becomes effective (other than the ability to make additional investments in an investment fund invested primarily in New Worthington Common Stock), (ii) each Worthington Steel Employee who is a participant in the New Worthington 401(k) Plan shall automatically cease to be eligible to make or receive additional contributions under the New Worthington 401(k) Plan with respect to compensation earned on or after the date on which the Worthington Steel 401(k) Plan becomes effective, (iii) as soon as administratively practicable after the Worthington Steel 401(k) Plan becomes effective, New Worthington shall cause the accounts (including any outstanding participant loan balances) in the New Worthington 401(k) Plan attributable to Worthington Steel Employees and all of the Assets in the New Worthington 401(k) Plan related thereto to be transferred in-kind to the Worthington Steel 401(k) Plan, and (iv) effective as of the date that the Worthington Steel 401(k) Plan becomes effective, a member of the Worthington Steel Group, shall be the plan sponsor of the Worthington Steel 401(k) Plan, and such plan sponsor shall thereafter fully pay, perform and discharge, all obligations thereunder.

(b) The respective investment committees and other fiduciaries of the Worthington Steel 401(k) Plan and the New Worthington 401(k) Plan, shall determine (i) the period of time, if any, following the Effective Time, if, and to the extent, investments under such plans may be comprised of Worthington Steel Common Stock or New Worthington Common Stock, and (ii) the extent to which and when New Worthington Common Stock (in the case of the Worthington Steel 401(k) Plan) and Worthington Steel Common Stock (in the case of the New Worthington 401(k) Plan) shall cease to be investment alternatives of the respective plans.

(c) New Worthington shall retain all accounts and all Assets and Liabilities relating to the New Worthington 401(k) Plan in respect of each Former Worthington Steel Service Provider; provided that if any Worthington Steel Employee whose account balance is transferred from the New Worthington 401(k) Plan to the Worthington Steel 401(k) Plan, as set forth in Section 3.2(a) thereafter terminates employment after the Plan Transition Date but before the Effective Time, such individual’s account balance shall nonetheless continue to be held in, and subject to the terms and conditions of, the Worthington Steel 401(k) Plan.

3.3 Deferred Compensation Plans.

(a) (i) Effective as of the Plan Transition Date, New Worthington and Worthington Steel shall cause Worthington Steel to have in effect the Worthington Steel DCP, a non-qualified deferred compensation plan for the benefit of each Worthington Steel Employee that is eligible to participate in the New Worthington DCP immediately prior to the Plan Transition Date, with terms that are substantially similar to those provided to the applicable Worthington Steel Employee under the New Worthington DCP immediately prior to the date on which the Worthington Steel DCP becomes effective, (ii) the participation of each Worthington Steel Employee who is a participant in the New Worthington DCP shall cease effective upon the date

 

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on which the Worthington Steel DCP becomes effective, and (iii) each such Worthington Steel Employee shall become a participant in the Worthington Steel DCP, and, with respect to such Worthington Steel Employee, all deferral and payment elections made under the New Worthington DCP shall be applied under the Worthington Steel DCP as if made under the Worthington Steel DCP, and all contributions that otherwise would have been credited under the New Worthington DCP on or after the Plan Transition Date shall instead be credited to the Worthington Steel DCP.

(b) Effective as of the Plan Transition Date (i) the account balances of each Worthington Steel Employee under the New Worthington DCP shall be transferred to the Worthington Steel DCP and Worthington Steel shall cause Worthington Steel to fully perform, pay and discharge all obligations of the New Worthington DCP relating to such account balances, (ii) any such account balances that are payable in shares of New Worthington Common Stock shall be payable in shares of Worthington Steel Common Stock in accordance with the terms applicable to such account balances, (iii) any such account balances that were credited with earnings based on a rate of return relating to notional shares of New Worthington Common Stock shall instead be credited with earnings based on a rate of return relating to notional shares of Worthington Steel Common Stock, and (iv) any notional shares of New Worthington Common Stock and any shares of New Worthington Common Stock in a deferred share account shall be adjusted in the same manner as set forth in Section 4.2 as if such shares or notional shares of New Worthington Common Stock were New Worthington Restricted Stock Awards and such accounts shall thereafter relate to shares or notional shares of Worthington Steel Common Stock.

(c) New Worthington shall retain (i) all Assets, if any, relating to the New Worthington DCP in respect of New Worthington Employees, and (ii) all Liabilities in respect of each New Worthington Employee in respect of the New Worthington DCP, and any notional shares of New Worthington Common Stock and any shares of New Worthington Common Stock in a deferred share account under the New Worthington DCP shall be adjusted in the same manner as set forth in Section 4.2 as if such shares or notional shares of New Worthington Common Stock were New Worthington Restricted Stock Awards. New Worthington shall retain no Liability or Asset relating to the New Worthington DCP in respect of Worthington Steel Employees and Former Worthington Steel Service Providers that are assigned to Worthington Steel pursuant to Section 3.3(b).

(d) Effective as of the Effective Time or such earlier date agreed to by the Parties, Worthington Steel shall have in effect the Worthington Steel Director DCP with terms that are substantially similar to those provided under the New Worthington Director DCP. The New Worthington Director DCP shall continue in effect after the Distribution Date in accordance with its terms, with payments made to current and former members of the New Worthington Board pursuant to their applicable deferral elections. For purposes of clarity, with respect to any member of the New Worthington Board who ceases to serve as a member of the New Worthington Board at the Effective Time but who serves as a member of the board of directors of Worthington Steel at the Effective Time (i) the participation of each such member of the New Worthington Board who is a participant in the New Worthington Director DCP shall cease effective upon the date on which the Worthington Steel Director DCP becomes effective, (ii) each such member of the New Worthington Board shall become a participant in the Worthington Steel Director DCP, and, with respect to such member of the New Worthington Board, all deferral and payment elections made under the New Worthington Director DCP shall be applied under the Worthington Steel Director DCP as if made under the Worthington Steel DCP, and all contributions that otherwise would have been credited under the New Worthington Director DCP on or after the Plan Transition Date shall instead be credited to the Worthington Steel Director DCP and (iii) the account balances of each such member of the New Worthington Board shall be transferred to the Worthington Steel Director DCP in a manner consistent with Section 3.3(b) and (c).

 

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(e) After the Effective Time, New Worthington shall pay any benefit accrued for a Worthington Steel Employee under the New Worthington Pre-2005 DCP in accordance with the terms and conditions of the New Worthington Pre-2005 DCP.

3.4 Chargeback of Certain Costs. Nothing contained in this Agreement shall limit New Worthington’s ability to charge back any Liabilities that it incurs in respect of any New Worthington Benefit Arrangement to any of its operating companies in the ordinary course of business consistent with its past practices.

ARTICLE IV.

EQUITY INCENTIVE AWARDS

4.1 Treatment of New Worthington Options.

(a) New Worthington Options Held by New Worthington Employees and Former New Worthington Employees. Each New Worthington Option that is outstanding as of immediately prior to the Effective Time that is held by a New Worthington Employee or Former New Worthington Employee shall be adjusted, as of the Effective Time into a post-Distribution New Worthington Option pursuant to the following adjustment provisions (and shall otherwise be subject to the same terms and conditions after the Effective Time as applied to such New Worthington Option immediately prior to the Effective Time):

(i) Shares Subject to the Post-Distribution New Worthington Option. The number of shares of New Worthington Common Stock subject to the post-Distribution New Worthington Option shall be equal to the product obtained by multiplying (x) the number of shares of New Worthington Common Stock subject to the New Worthington Option immediately prior to the Effective Time, times (y) the New Worthington Ratio, and rounding down to the nearest whole share.

(ii) Exercise Price of Post-Distribution New Worthington Option. The per share exercise price of the post-Distribution New Worthington Option shall be equal to the quotient obtained by dividing (x) the per share exercise price of the New Worthington Option immediately prior to the Effective Time, by (y) the New Worthington Ratio, and rounding such quotient up to the nearest whole cent.

(b) New Worthington Options Held by Worthington Steel Employees Worthington Steel Independent Contractors and Former Worthington Steel Service Providers. Each New Worthington Option that is outstanding as of to the Effective Time that is held by a Worthington Steel Employee, Worthington Steel Independent Contractor or Former Worthington Steel Service Provider shall be adjusted, as of immediately prior to the Effective Time into a Worthington Steel Option pursuant to the following adjustment provisions (and shall otherwise be subject to the same terms and conditions after the Effective Time as applied to such New Worthington Option immediately prior to the Effective Time):

 

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(i) Shares Subject to New Worthington Steel Option. The number of shares of Worthington Steel Common Stock subject to the Worthington Steel Option shall be equal to the product obtained by multiplying (x) the number of shares of New Worthington Common Stock subject to the New Worthington Option immediately prior to the Effective Time, times (y) the Worthington Steel Ratio, and rounding down to the nearest whole share.

(ii) Exercise Price of New Worthington Steel Option. The per share exercise price of the Worthington Steel Option shall be equal to the quotient obtained by dividing (x) the per share exercise price of the New Worthington Option immediately prior to the Effective Time, by (y) the Worthington Steel Ratio, and rounding such quotient up to the nearest whole cent.

(c) The adjustments to the New Worthington Options contemplated by this Agreement, including without limitation, adjustments to the exercise price of New Worthington Options, to the number of shares subject to New Worthington Options and conversions into Worthington Steel Options and post-Distribution New Worthington Options, are all intended to comply in all respects with the requirements of Sections 409A and 424 of the Code, in each case, to the extent applicable, and all such provisions shall be interpreted and implemented in accordance with the foregoing.

4.2 Treatment of New Worthington Restricted Stock Awards. Subject to Section 4.5:

(a) New Worthington Restricted Stock Awards held by New Worthington Employees and New Worthington Non-Employee Directors. Each New Worthington Restricted Stock Award that is outstanding as of immediately prior to the Effective Time that is held by a New Worthington Employee or a New Worthington Non-Employee Director shall be adjusted, as of the Effective Time, into a New Worthington Restricted Stock Award that (i) covers a number of post-Distribution shares of New Worthington Common Stock determined by multiplying (A) the number of shares of New Worthington Common Stock covered by the New Worthington Restricted Stock Award immediately prior to the Effective Time by (B) the New Worthington Ratio (rounding such product down to the nearest whole share), and (ii) is subject to the same terms and conditions after the Effective Time as applied immediately prior to the Effective Time.

(b) New Worthington Restricted Stock Awards held by Worthington Steel Employees, Worthington Steel Non-Employee Directors and Worthington Steel Independent Contractors. Each New Worthington Restricted Stock Award that is outstanding as of immediately prior to the Effective Time that is held by a Worthington Steel Employee, a Worthington Steel Non-Employee Director or a Worthington Steel Independent Contractor shall be adjusted, as of the Effective Time, into a Worthington Steel Restricted Stock Award that (i) covers a number of shares of Worthington Steel Common Stock equal to the product obtained by multiplying (A) the number of shares of New Worthington Common Stock covered by the New Worthington Restricted Stock Award immediately prior to the Effective Time by (B) the Worthington Steel Ratio (rounding such product down to the nearest whole share), and (ii) is otherwise subject to the same terms and conditions after the Effective Time as applied to such New Worthington Restricted Stock Award immediately prior to the Effective Time.

 

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4.3 Treatment of New Worthington Performance Awards. Subject to Section 4.5:

(a) New Worthington Performance Awards Held by New Worthington Employees.

(i) New Worthington Non-Retirement Eligible Holders – FY2024 and FY2025 Plans. Each New Worthington Performance Award with a performance period ending on May 31, 2024 or May 31, 2025 that is outstanding as of immediately prior to the Effective Time that is held by a New Worthington Non-Retirement Eligible Holder shall be adjusted, as of the Effective Time, into an award that (A) covers (i) a number of post-Distribution shares of New Worthington Common Stock determined by multiplying (x) the number of shares of New Worthington Common Stock covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, by (y) the New Worthington Ratio (rounding such product down to the nearest whole share) and (ii) an amount in cash equal to the portion of the cash award covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, (B) shall continue to be subject to vesting based on such New Worthington Employee’s continued employment with the New Worthington Group following the Distribution Date in accordance with the terms and conditions applicable to such New Worthington Performance Award as in effect immediately prior to the Distribution Date had the applicable performance period continued in effect, and (C) shall otherwise be subject to the same terms and conditions (including with respect to the payment or settlement of such New Worthington Performance Award) after the Effective Time as applied to the applicable New Worthington Performance Award immediately prior to the Effective Time.

(ii) New Worthington Retirement Eligible Holders – FY2024 and FY2025 Plans. Each New Worthington Performance Award with a performance period ending on May 31, 2024 or May 31, 2025 that is outstanding as of immediately prior to the Effective Time that is held by a New Worthington Retirement Eligible Holder shall be adjusted, as of the Effective Time, into an award that (A) covers (i) a number of post-Distribution shares of New Worthington Common Stock determined by multiplying (x) the number of shares of New Worthington Common Stock covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, by (y) the New Worthington Ratio (rounding such product down to the nearest whole share) and (ii) an amount in cash equal to the portion of the cash award covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, (B) shall vest immediately

 

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prior to the Effective Time with respect to such shares or cash determined in accordance with clause (i) and (ii) above, and shall be paid or settled, in each case, by New Worthington, no later than March 15 of the year following the year in which such vesting date occurs, and (C) shall otherwise be subject to the same terms and conditions after the Effective Time as applied to the applicable New Worthington Performance Award immediately prior to the Effective Time.

(iii) FY2026 Plan. Each New Worthington Performance Award with a performance period ending on May 31, 2026 that is outstanding as of immediately prior to the Effective Time that is held by a New Worthington Employee shall be adjusted, as of the Effective Time, into an award that (A) covers (i) a number of post-Distribution shares of New Worthington Common Stock determined by multiplying (x) the number of shares of New Worthington Common Stock covered by the New Worthington Performance Award immediately prior to the Effective Time, by (y) the New Worthington Ratio (rounding such product down to the nearest whole share) and (ii) an amount in cash equal to cash award covered by the New Worthington Performance Award immediately prior to the Effective Time, and (B) shall be subject to the same terms and conditions after the Effective Time as applied to such New Worthington Performance Award immediately prior to the Effective Time, subject to such adjustment to the applicable performance goals and/or performance calculation methodology as may be determined by the Compensation Committee of the New Worthington Board in its discretion to reflect the transactions contemplated by the Separation Agreement.

(b) New Worthington Performance Share Awards held by Worthington Steel Employees and Worthington Steel Independent Contractors.

(i) Worthington Steel Non-Retirement Eligible Holders – FY2024 and FY2025 Plans. Each New Worthington Performance Award with a performance period ending on May 31, 2024 or May 31, 2025 that is outstanding as of immediately prior to the Effective Time that is held by a Worthington Steel Non-Retirement Eligible Holder shall be adjusted, as of the Effective Time, into an award that (A) covers (i) a number of shares of Worthington Steel Common Stock determined by multiplying (x) the number of shares of New Worthington Common Stock covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, by (y) the Worthington Steel Ratio (rounding such product down to the nearest whole share) and (ii) an amount in cash equal to the portion of the cash award covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, (B) shall continue to be subject to vesting based on such Worthington Steel Employee’s or Worthington Steel Independent Contractor’s continued employment or service with the Worthington Steel Group following the Distribution Date in accordance with the terms and conditions

 

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applicable to such New Worthington Performance Award as in effect immediately prior to the Distribution Date had the applicable performance period continued in effect, and (C) shall otherwise be subject to the same terms and conditions (including with respect to the payment or settlement of such New Worthington Performance Award) after the Effective Time as applied to the applicable New Worthington Performance Award immediately prior to the Effective Time, as may be modified by New Worthington or Worthington Steel in order to reflect the transactions contemplated by the Separation Agreement.

(ii) Worthington Steel Retirement Eligible Holders – FY2024 and FY2025 Plans. Each New Worthington Performance Award with a performance period ending on May 31, 2024 or May 31, 2025 that is outstanding as of immediately prior to the Effective Time that is held by a Worthington Steel Retirement Eligible Holder shall be adjusted, as of the Effective Time, into an award that (A) covers (i) a number of post-Distribution shares of Worthington Steel Common Stock determined by multiplying (x) the number of shares of New Worthington Common Stock covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, by (y) the Worthington Steel Ratio (rounding such product down to the nearest whole share) and (ii) an amount in cash equal to the portion of the cash award covered by the New Worthington Performance Award immediately prior to the Effective Time that would have satisfied the applicable performance conditions based on actual performance as of the day immediately prior to the Distribution Date had the performance period ended on such date and after giving effect to the adjustments to the performance calculation methodology set forth on Exhibit A attached hereto, (B) shall vest immediately prior to the Effective Time with respect to such shares or cash determined in accordance with clause (i) and (ii) above, and shall be paid or settled, in each case, by Worthington Steel no later than March 15 of the year following the year in which such vesting date occurs, and (C) shall otherwise be subject to the same terms and conditions after the Effective Time as applied to the applicable New Worthington Performance Award immediately prior to the Effective Time, as may be modified by New Worthington or Worthington Steel in order to reflect the transactions contemplated by the Separation Agreement.

(iii) FY2026 Plan. Each New Worthington Performance Award with a performance period ending on May 31, 2026 that is outstanding as of immediately prior to the Effective Time that is held by a Worthington Steel Employee shall be adjusted, as of the Effective Time, into a Worthington Steel performance share and performance cash award (a “Worthington Steel Performance Award”) that (A) covers (i) a number of shares of Worthington Steel Common Stock determined by multiplying (x) the number of shares of New Worthington Common Stock covered by the New Worthington Performance Award immediately prior to the Effective Time by (y) the Worthington Steel Ratio (rounding such product down to the nearest whole share) and (ii) an amount in cash equal to cash award covered by the New Worthington Performance Award immediately prior to the Effective Time, and (B) shall be subject to the same terms and conditions after the

 

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Effective Time as applied to such New Worthington Performance Award immediately prior to the Effective Time, as may be modified by New Worthington or Worthington Steel in order to reflect the transactions contemplated by the Separation Agreement (including with respect to the applicable performance goals and/or performance calculation methodology).

4.4 Worthington Steel Stock Plan. Effective as of the Effective Time, Worthington Steel shall adopt the Worthington Steel Stock Plan, which shall permit the grant and issuance of equity incentive awards denominated in Worthington Steel Common Stock as described in this Article IV.

4.5 General Terms.

(a) All of the adjustments described in this Article IV shall be effected in accordance with Sections 424 and 409A of the Code, in each case to the extent applicable.

(b) Without limiting the generality of the foregoing, with respect to awards held by Worthington Steel Employees, Worthington Steel Non-Employee Directors and Worthington Steel Independent Contractors, effective as of the Effective Time, references to employment or service, or termination of employment or service, in the applicable plan and/or award agreement shall be deemed to refer to employment or service, or termination of employment or service, with the Worthington Steel Group following the Distribution.

(c) The Parties shall use their reasonable best efforts to file the appropriate registration statements with respect to, and to cause to be registered pursuant to the Securities Act, the shares of Worthington Steel Common Stock authorized for issuance under the Worthington Steel Stock Plan, as required pursuant to the Securities Act, at or promptly following the Effective Time and in any event before the date of issuance of any Worthington Steel Common Stock pursuant to the Worthington Steel Stock Plan. New Worthington agrees that, following the Distribution Date, it shall use reasonable best efforts to continue to maintain an effective registration statement with respect to, and to cause to be registered pursuant to the Securities Act, the shares of New Worthington Common Stock authorized for issuance pursuant to the applicable awards described in this Article IV, as required by the Securities Act and any applicable rules or regulations thereunder.

(d) Each of the Parties shall establish an appropriate administration system in order to handle in an orderly manner exercises of New Worthington Options and Worthington Steel Options and the settlement of other equity awards described in this Article IV. The Parties shall work together to unify and consolidate all indicative data and payroll and employment information on regular timetables and make certain that each applicable entity’s data and records in respect of such awards are correct and updated on a timely basis. The foregoing shall include employment status and information required for tax withholding/remittance and reporting, compliance with trading windows and compliance with the requirements of the Exchange Act and other applicable Laws.

(e) The Parties hereby acknowledge that the provisions of this Article IV are intended to achieve certain Tax, legal and accounting objectives and, in the event such objectives are not achieved, the Parties agree to negotiate in good faith regarding such other actions that may be necessary or appropriate to achieve such objectives.

 

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ARTICLE V.

ADDITIONAL MATTERS

5.1 Cash Incentive Programs. Prior to or as soon as reasonably practicable following the Distribution Date, Worthington Steel shall, or shall cause another member of the Worthington Steel Group to, adopt, for the benefit of eligible Worthington Steel Employees, programs providing cash incentives, commissions, annual performance bonuses, or similar cash payments for the calendar year in which the Distribution Date occurs (the “Worthington Steel Cash Incentive Programs”) that are substantially similar to the applicable programs maintained by New Worthington for the benefit of such individuals prior to the Distribution Date (the “New Worthington Cash Incentive Programs”), provided that the applicable performance criteria may be adjusted in the discretion of the board of directors of Worthington Steel or the compensation committee thereof to reflect the transactions contemplated by the Separation Agreement. Following the Effective Time, Worthington Steel shall assume or retain, as applicable, responsibility for any and all payments, obligations and other Liabilities relating to (a) any amounts that any Worthington Steel Employee or any Former Worthington Steel Service Provider has either earned (if not payable by its terms prior to the Distribution Date) or has become eligible to earn, in either case, as of the Effective Time, under the New Worthington Cash Incentive Programs, and (b) any amounts that any Worthington Steel Employee or any Former Worthington Steel Service Provider has earned or is eligible to earn under any Worthington Steel Benefit Arrangement(s) providing cash incentive compensation, commissions, annual performance bonus, or similar cash payments (including the Worthington Steel Cash Incentive Programs), and shall fully perform, pay and discharge the foregoing if and when such payments, obligations and/or other Liabilities become due. Following the Effective Time, the Worthington Steel Group shall be solely responsible for, and no member of the New Worthington Group shall have any obligation or Liability with respect to, any and all such amounts.

5.2 Time-Off Benefits. Unless otherwise required by applicable Law, Worthington Steel shall (i) credit each Worthington Steel Employee with the amount of accrued but unused vacation time, paid time-off and other time-off benefits as such Worthington Steel Employee had with the New Worthington Group immediately before the date on which the employment of the Worthington Steel Employee transfers to Worthington Steel or any member of the Worthington Steel Group and (ii) permit each such Worthington Steel Employee to use such accrued but unused vacation time, paid time off and other time-off benefits in the same manner and upon the same terms and conditions as the Worthington Steel Employee would have been so permitted under the terms and conditions of the applicable New Worthington policies in effect for the year in which such transfer of employment occurs, up to and including full exhaustion of such transferred unused vacation time, paid-time off and other time-off benefits (if such full exhaustion would be permitted under the applicable New Worthington policies in effect for that year in which the transfer of employment occurs).

 

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5.3 Workers Compensation Liabilities. Effective no later than the Effective Time, Worthington Steel shall, or shall cause a member of the Worthington Steel Group to, assume all Liabilities for Worthington Steel Employees, Worthington Steel Independent Contractors and Former Worthington Steel Service Providers related to any and all workers’ compensation injuries, incidents, conditions, claims or coverage, whenever incurred (including claims incurred prior to the Effective Time but not reported until after the Effective Time), and Worthington Steel, or, as applicable, a member of the Worthington Steel Group, shall be fully responsible for the administration, management and payment of all such claims and satisfaction of all such Liabilities. Notwithstanding the foregoing, if Worthington Steel, or a member of the Worthington Steel Group, is unable to assume any such Liability or the administration, management or payment of any such claim solely because of the operation of applicable Law or due to such other circumstances as may be determined by New Worthington, New Worthington shall retain such Liabilities and Worthington Steel shall, or shall cause a member of the Worthington Steel Group to, reimburse and otherwise fully indemnify New Worthington for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.

5.4 COBRA Compliance.

(a) Effective as of the Plan Transition Date, Worthington Steel (acting directly or through any other member of the Worthington Steel Group) and the Worthington Steel Welfare Plans shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA with respect to all Worthington Steel Employees and Former Worthington Steel Service Providers (and their respective dependents and beneficiaries), in each case, who experience a COBRA qualifying event at any time prior to, upon or after the Plan Transition Date. Effective as of the Plan Transition Date, New Worthington (acting directly or through any other member of the New Worthington Group) and the New Worthington Welfare Plans shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA with respect to all New Worthington Employees and Former New Worthington Employees (and their respective dependents and beneficiaries), in each case, who experience a COBRA qualifying event at any time prior to, upon or after the Plan Transition Date. Neither the consummation of the Distribution, any transfer of employment contemplated hereby, or any related transactions or events contemplated by the Separation Agreement, this Agreement or any other ancillary agreement shall constitute a COBRA qualifying event for purposes of COBRA with respect to any Worthington Steel Employees or Former Worthington Steel Service Providers (or any dependent or beneficiary thereof).

(b) Effective as of the Plan Transition Date, Worthington Steel (acting directly or through any other member of the Worthington Steel Group) shall be responsible for compliance with any certificate of creditable coverage or other applicable requirements of HIPAA or Medicare applicable to the Worthington Steel Welfare Plans with respect to Worthington Steel Employees and Former Worthington Steel Service Providers. New Worthington (acting directly or through any other member of the New Worthington Group) shall be responsible for compliance with any certificate of creditable coverage or other applicable requirements of HIPAA or Medicare applicable to the New Worthington Welfare Plans with respect to New Worthington Employees and Former New Worthington Employees.

 

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5.5 Code Section 409A. Notwithstanding anything in this Agreement or the Tax Matters Agreement to the contrary, the Parties shall negotiate in good faith regarding the need for any treatment different from that otherwise provided herein with respect to the payment of compensation to ensure that the treatment of such compensation does not cause the imposition of a Tax under Section 409A of the Code. In no event, however, shall any Party be liable to another in respect of any Taxes imposed under, or any other costs or Liabilities relating to, Section 409A of the Code.

5.6 Payroll Taxes and Reporting. Notwithstanding anything in the Tax Matters Agreement to the contrary, with respect to Worthington Steel Employees, the Parties shall adopt the “standard procedure” for preparing and filing IRS Forms W-2 (Wage and Tax Statements), as described in Revenue Procedure 2004-53 (“Rev. Proc. 2004-53”). Each Party shall be responsible for filing IRS Forms 941 for its respective employees.

5.7 Regulatory Filings. Subject to applicable Law and notwithstanding anything in the Tax Matters Agreement to the contrary, New Worthington shall retain responsibility for all employee-related regulatory filings for reporting periods ending at or prior to the Effective Time, except for Equal Employment Opportunity Commission EEO-1 reports and affirmative action program (AAP) reports and responses to Office of Federal Contract Compliance Programs (OFCCP) submissions, for which New Worthington shall provide data and information (to the extent permitted by applicable Laws) to Worthington Steel, which shall be responsible for making, or causing a member of the Worthington Steel Group to make, such filings in respect of Worthington Steel Employees.

5.8 Disability. For any Former Worthington Steel Service Provider who is, as of the Effective Time, receiving payments as part of any long-term disability program that is part of a New Worthington Welfare Plan, and has been receiving payments from such plan for twelve (12) months or fewer before the Effective Time, to the extent such Former Worthington Steel Service Provider may have any “return to work” rights under the terms of such New Worthington Welfare Plan, such Former Worthington Steel Service Provider’s eligibility for re-employment shall be with Worthington Steel or a member of the Worthington Steel Group, subject to availability of a suitable position (with such availability to be determined in the sole discretion by Worthington Steel or the applicable member of the Worthington Steel Group). For purposes of clarity, no Former Worthington Steel Service Provider described in this subsection will have return-to-work rights after the first anniversary of the Effective Time.

5.9 Certain Requirements. Notwithstanding anything in this Agreement to the contrary, if the terms of applicable Law require that any assets or Liabilities be retained by the New Worthington Group or transferred to or assumed by the Worthington Steel Group in a manner that is different from that set forth in this Agreement, such retention, transfer or assumption shall be made in accordance with the terms of such applicable Law and shall not be made as otherwise set forth in this Agreement.

ARTICLE VI.

GENERAL AND ADMINISTRATIVE

6.1 Employer Rights. Nothing in this Agreement shall be deemed to be an amendment to any New Worthington Benefit Arrangement or Worthington Steel Benefit Arrangement or to prohibit New Worthington, Worthington Steel, or any member of the New Worthington Group or Worthington Steel Group, as the case may be, from amending, modifying or terminating any New Worthington Benefit Arrangement or Worthington Steel Benefit Arrangement at any time within its sole discretion.

 

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6.2 Effect on Employment. Nothing in this Agreement is intended to or shall confer upon any employee or former employee of New Worthington, the New Worthington Group, Worthington Steel or the Worthington Steel Group any right to continued employment, or any recall or similar rights to any such individual on layoff or any type of approved leave.

6.3 Consent of Third Parties. If any provision of this Agreement is dependent on the consent of any third party and such consent is withheld, the Parties shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the fullest extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision (as applicable) in a mutually satisfactory manner.

6.4 Access to Employees. On and after the Effective Time, New Worthington and Worthington Steel shall, or shall cause each of their respective Affiliates to, make available to each other those of their employees who may reasonably be needed in order to defend or prosecute any legal or administrative action (other than a legal action between New Worthington and Worthington Steel) to which any employee or director of the New Worthington Group or the Worthington Steel Group or any New Worthington Benefit Arrangement or Worthington Steel Benefit Arrangement is a party and which relates to a New Worthington Benefit Arrangement or Worthington Steel Benefit Arrangement. The Party to whom an employee is made available in accordance with this Section 6.4 shall pay or reimburse the other Party for all reasonable expenses which may be incurred by such employee in connection therewith, including all reasonable travel, lodging, and meal expenses, but excluding any amount for such employee’s time spent in connection herewith.

6.5 Beneficiary Designation/Release of Information/Right to Reimbursement. To the extent permitted by applicable Law and except as otherwise provided for in this Agreement, all beneficiary designations, authorizations for the release of information and rights to reimbursement made by or relating to Worthington Steel Employees under New Worthington Benefit Arrangements shall be transferred to and be in full force and effect under the corresponding Worthington Steel Benefit Arrangements until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant Worthington Steel Employee.

6.6 No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties and, except to the extent otherwise expressly provided herein, nothing in this Agreement, express or implied, is intended to confer any rights, benefits, remedies, obligations or Liabilities under this Agreement upon any Person, including any Worthington Steel Employee or other current or former employee, officer, director or contractor of the New Worthington Group or Worthington Steel Group, other than the Parties and their respective successors and assigns.

 

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6.7 No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement, no participant in any Worthington Steel Benefit Arrangement or any other benefit plans or arrangements shall receive benefits that duplicate benefits provided to such individual by a corresponding New Worthington Benefit Arrangement, and no participant in any New Worthington Benefit Arrangement or any other benefit plans or arrangements of a member of the New Worthington Group shall receive benefits that duplicate benefits provided to such individual by a corresponding Worthington Steel Benefit Arrangement. Except as otherwise provided in this Agreement, no provision of this Agreement shall be construed to create any right, or accelerate vesting or entitlement, to any compensation or benefit whatsoever on the part of any Worthington Steel Employee or other former, current or future employee of the New Worthington Group or Worthington Steel Group under any New Worthington Benefit Arrangement or Worthington Steel Benefit Arrangement.

6.8 Employee Benefits Administration. At all times following the date hereof, the Parties will cooperate in good faith as necessary to facilitate the administration of employee benefits and the resolution of related employee benefit claims with respect to Worthington Steel Employees, Former Worthington Steel Service Providers and New Worthington Employees and service providers of New Worthington, as applicable, including with respect to the provision of employee level information necessary for the other Party to manage, administer, finance and file required reports with respect to such administration.

ARTICLE VII.

MISCELLANEOUS

7.1 Counterparts; Entire Agreement; Corporate Power.

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to each other Party. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile, electronic mail (including .pdf, DocuSign or other electronic signature) or other transmission method shall be deemed to have been duly and validly delivered and shall be sufficient to bind the parties to the terms and conditions of this Agreement.

(b) This Agreement, the Separation Agreement, and the exhibits, annexes and schedules hereto and thereto, contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c) Each Party represents on behalf of itself and each other member of its Group as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement to which it is a party and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been or will be duly executed and delivered by it and constitutes or will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

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7.2 Governing Law. This Agreement (and any claims or Disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Ohio, irrespective of the choice of laws principles of the State of Ohio, including all matters of validity, construction, effect, enforceability, performance and remedies.

7.3 Assignability. Except as set forth in this Agreement or the Separation Agreement, this Agreement shall be binding upon and inure to the benefit of the other Party or the other parties hereto and thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party or party thereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party or other parties thereto, as applicable. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement or the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party. Nothing herein is intended to, or shall be construed to, prohibit either Party or any member of its Group from being party to or undertaking a change of control.

7.4 Third-Party Beneficiaries. Except for the release and indemnification rights under this Agreement of any New Worthington Indemnitee or Worthington Steel Indemnitee in their respective capacities as such, and the provisions of Section 5.1(d) of the Separation Agreement as to directors and officers of New Worthington Group and Worthington Steel Group: (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including, without limitation, any shareholders of New Worthington or shareholders of Worthington Steel) except the Parties hereto any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and neither this Agreement, the Separation Agreement nor any Ancillary Agreement shall provide any third Person (including, without limitation, any shareholders of New Worthington or shareholders of Worthington Steel) with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

7.5 Notices. All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email with receipt confirmed, or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 7.5):

If to New Worthington, to:

Worthington Industries, Inc.

200 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Patrick Kennedy, General Counsel

 

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Email: patrick.kennedy@worthingtonindustries.com

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

330 North Wabash Avenue, Suite 2800

Chicago, IL 60611

Attention: Cathy Birkeland; Christopher Drewry

Email: cathy.birkeland@lw.com; christopher.drewry@lw.com

If to Worthington Steel, to:

Worthington Steel, Inc.

100 West Old Wilson Bridge Road

Columbus, OH 43085

Attention: Michaune Tillman, General Counsel

Email: michaune.tillman@worthingtonindustries.com

Any Party may, by notice to the other Party, change the address and contact person to which any such notices are to be given.

7.6 Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

7.7 Force Majeure. No Party shall be deemed in default of this Agreement or, unless otherwise provided therein, the Separation Agreement or any other Ancillary Agreement for any delay or failure to fulfill any obligation, other than a delay or failure to make a payment, so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement, the Separation Agreement and the other Ancillary Agreements, as applicable, as soon as reasonably practicable.

7.8 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

 

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7.9 Survival of Covenants. Except as expressly set forth in this Agreement, the Separation Agreement or any other Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and the Ancillary Agreements, and liability for the breach of any obligations contained herein or therein, shall survive the Separation and the Distribution and shall remain in full force and effect in accordance with their terms.

7.10 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement, the Separation Agreement or any other Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement or any Ancillary Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

7.11 Dispute Resolution. Any and all disputes, controversies and claims arising hereunder, including with respect to the validity, interpretation, performance, breach or termination of this Agreement shall be resolved through the procedures provided in Article IV of the Separation Agreement.

7.12 Amendments. No provisions of this Agreement, the Separation Agreement or any other Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced; provided, at any time prior to the Effective Time, the terms and conditions of this Agreement, including terms relating to the Separation and the Distribution, may be amended, modified or abandoned by and in the sole and absolute discretion of the New Worthington Board without the approval of any Person, including Worthington Steel or New Worthington.

7.13 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

7.14 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.

 

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7.15 Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a shareholder, director, employee, officer, agent or representative of New Worthington or Worthington Steel, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of New Worthington or Worthington Steel, as applicable, under this Agreement, the Separation Agreement or any other Ancillary Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of New Worthington or Worthington Steel, for itself and its respective Subsidiaries and its and their respective shareholders, directors, employees and officers, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.

7.16 Exclusivity of Tax Matters. Notwithstanding any other provision of this Agreement, the Tax Matters Agreement shall exclusively govern all matters related to Taxes (including allocations thereof) addressed therein. If there is a conflict between any provision of this Agreement, the Separation Agreement or of any other Ancillary Agreement (other than the Tax Matters Agreement), on the one hand, and the Tax Matters Agreement, on the other hand, and such provisions relate to matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall control.

7.17 Limitations of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT, THE SEPARATION AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT TO THE CONTRARY, NEITHER WORTHINGTON STEEL NOR ITS AFFILIATES, ON THE ONE HAND, NOR NEW WORTHINGTON NOR ITS AFFILIATES, ON THE OTHER HAND, SHALL BE LIABLE UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE OTHER FOR ANY INCIDENTAL CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO INDEMNIFICATION OF SUCH DAMAGES, INCLUDING ALL COSTS, EXPENSES, INTEREST, ATTORNEYS’ FEES, DISBURSEMENTS AND EXPENSES OF COUNSEL, EXPERT AND CONSULTING FEES AND COSTS RELATED THERETO OR TO THE INVESTIGATION OR DEFENSE THEREOF, PAID BY AN INDEMNITEE IN RESPECT OF A THIRD-PARTY CLAIM).

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

WORTHINGTON INDUSTRIES, INC.
By:  

/s/ Joseph B. Hayek

Name:

Title:

 

Joseph B. Hayek

Vice President

WORTHINGTON STEEL, INC.
By:  

/s/ Timothy A. Adams

Name:

Title:

 

Timothy A. Adams

Vice President

Exhibit 10.4

TRADEMARK LICENSE AGREEMENT

BY AND BETWEEN

WORTHINGTON INDUSTRIES, INC.

AND

WORTHINGTON STEEL, INC.

DATED AS OF NOVEMBER 30, 2023

 


TABLE OF CONTENTS

 

       Page  

ARTICLE I. DEFINITIONS

     1  

1.1

  Definitions      1  

1.2

  Interpretation      2  

ARTICLE II. LICENSE

     2  

2.1

  Grant of License      2  

2.2

  Sublicensing      2  

2.3

  Limitations / New Marks      2  

2.4

  Registration of the Licensed Marks      3  

2.5

  Expansion of Licensed Goods and Services      3  

2.6

  Domain Name Registrations      3  

ARTICLE III. OWNERSHIP AND INFRINGEMENT

     4  

3.1

  Ownership of New Worthington Marks; Goodwill and Reservation of Rights      4  

3.2

  No Inconsistent Action      4  

3.3

  Infringement      4  

ARTICLE IV. QUALITY STANDARDS

     4  

4.1

  Quality Assurance      4  

4.2

  Compliance with Law      5  

4.3

  Form of Use      5  

ARTICLE V. TERM AND TERMINATION

     5  

5.1

  Term      5  

5.2

  Termination      5  

5.3

  Effect of Termination      6  

5.4

  Survival      6  

ARTICLE VI. DISCLAIMER OF WARRANTIES

     6  

ARTICLE VII. LIMITATION OF LIABILITY

     6  

ARTICLE VIII. INDEMNIFICATION

     7  

ARTICLE IX. MISCELLANEOUS

     8  

9.1

  Counterparts; Entire Agreement; Corporate Power      8  

9.2

  Governing Law      8  

9.3

  Assignment      8  

 

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9.4

  Third Party Beneficiaries      9  

9.5

  Notices      9  

9.6

  Severability      10  

9.7

  Headings      10  

9.8

  Waivers of Default      10  

9.9

  Dispute Resolution      10  

9.10

  Amendments      10  

9.11

  Construction      10  

9.12

  Performance      11  

9.13

  Limited Liability      11  

9.14

  Exclusivity of Tax Matters      11  

Exhibits

Exhibit A            Licensed Marks

 

ii


TRADEMARK LICENSE AGREEMENT

This TRADEMARK LICENSE AGREEMENT (this “Agreement”) is entered into effective as of November 30, 2023 (the “Effective Date”), by and between Worthington Industries, Inc., an Ohio corporation (“New Worthington”) and Worthington Steel, Inc., an Ohio corporation (“Worthington Steel”). New Worthington and Worthington Steel are each a “Party” and are sometimes referred to herein collectively as the “Parties”.

RECITALS

WHEREAS, New Worthington, acting together with its Subsidiaries, currently conducts the New Worthington Business and the Worthington Steel Business;

WHEREAS, New Worthington and Worthington Steel have entered into that certain Separation and Distribution Agreement dated as of November 30, 2023 (as amended, restated, amended and restated and otherwise modified from time to time, the “Separation Agreement”) pursuant to which Worthington Steel will separate from the rest of New Worthington and be established as a separate, publicly traded company to operate the Worthington Steel Business;

WHEREAS, New Worthington, together with its Subsidiaries, owns certain Marks that were used in connection with both the Worthington Steel Business and the New Worthington Business prior to the Separation;

WHEREAS, in connection with the Separation, New Worthington has agreed to grant a license to Worthington Steel to use the Marks set forth on Exhibit A (the “Licensed Marks”), on the terms and conditions provided herein; and

WHEREAS, pursuant to the Separation Agreement, New Worthington and Worthington Steel have agreed that New Worthington will license Worthington Steel to use the Licensed Marks in connection with the Worthington Steel Business, in accordance with the terms of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants and agreements contained in this Agreement and in the Separation Agreement, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. Capitalized terms shall have the meanings set forth below in this Section 1.1 or elsewhere in this Agreement. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Separation Agreement.

Licensed Goods and Services” means the goods and services of the Worthington Steel Business as of the Effective Date, as such goods and services may naturally evolve in the field of the Worthington Steel Business during the Term, but excluding, for the avoidance of doubt, any goods or services of the New Worthington Business.

 

1


Marks” means trademarks, service marks, trade dress, trade names, logos, internet domain names and other source or business identifiers.

1.2 Interpretation. In this Agreement (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” “herewith” and words of similar import, and the term “Agreement” or any other reference to an agreement shall, unless otherwise stated, be construed to refer to this Agreement (including all of the Exhibits hereto and thereto) and not to any particular provision of this Agreement; (c) Article, Section, and Exhibit references are to the Articles, Sections, and Exhibits to this Agreement unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation”; (e) the word “or” shall not be exclusive; and (f) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” and words of similar import shall all be references to the date first stated in the preamble to this Agreement, regardless of any amendment or restatement hereof.

ARTICLE II.

LICENSE

2.1 Grant of License. Subject to the terms and conditions of this Agreement, New Worthington grants to Worthington Steel a royalty-free, fully paid-up, perpetual, non-exclusive, non-transferable (except as permitted under Section 9.3), non-sublicensable (except as permitted under Section 2.2), worldwide license to use the Licensed Marks as further specified in Section 2.3 solely in connection with the marketing, advertisement, provision, distribution and sale by Worthington Steel of Licensed Goods and Services (the “License”). Subject to the terms and conditions of this Agreement, and in furtherance of the foregoing, Licensee shall be permitted to use the Licensed Marks as part of domain names as specified in Section 2.6.

2.2 Sublicensing. Worthington Steel may sublicense the License granted to it hereunder to its Affiliates and third Persons to the extent necessary in connection with the marketing advertisement, provision, distribution and sale of Worthington Steel’s Licensed Goods and Services; provided, that, in each case, any such sublicensee is bound in writing to all applicable terms and conditions of this Agreement. Worthington Steel shall be responsible for the failure by any of its Affiliates or other sublicensees to comply with the terms of this Agreement.

2.3 Limitations / New Marks. Worthington Steel is only licensed to use the Licensed Marks, and not any variations, adaptations, translations, or derivatives thereof. For the avoidance of doubt, Worthington Steel will only use the term WORTHINGTON as part of the WORTHINGTON STEEL and WS WORTHINGTON STEEL composite Mark, and shall not use the term WORTHINGTON in a standalone form. If Worthington Steel desires to (a) use any variation, adaptation, translation, combination, or derivative of the Licensed Marks, (b) use any other New Worthington formative Mark or (c) use the Licensed Marks in combination with any other Marks, Worthington Steel shall seek New Worthington’s prior written approval, specifying the Marks that it desires to use, together with how it desires to use such Marks. If New Worthington determines that it would be advisable to perform a clearance search as part of the approval process, New Worthington may perform such clearance search with trademark counsel of its choosing, at Worthington Steel’s expense. If New Worthington approves Worthington Steel’s request, the Parties will amend this Section 2.3 and the definition of Licensed Marks, in each case to the extent applicable, to permit the use of the new Mark.